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DR. REDDY'S LABORATORIES LIMITEDSUBSIDIARY COMPANIES FINANCIALS - 2012-13
CONTENTS
1 Aurigene Discovery Technologies (Malaysia) SDN BHD ..................................................... 1
2 Aurigene Discovery Technologies Inc. ............................................................................... 15
3 Aurigene Discovery Technologies Limited.......................................................................... 26
4 beta Institut gemeinnützige GmbH ..................................................................................... 65
( formerly beta institut fur soziaimedizinsche Forschung and Entwicklung GmbH )
5 betapharm Arzneimittel GmbH ........................................................................................... 78
6 Cheminor Investments Limited ........................................................................................... 96
7 Chienna B.V. .................................................................................................................... 112
8 Chirotech Technology Limited .......................................................................................... 123
9 Dr. Reddy’s Farmaceutica Do Brasil Ltda. ....................................................................... 140
10 Dr. Reddy’s Laboratories (Proprietary) Limited ................................................................ 156
11 Dr. Reddy’s Laboratories Inc. ........................................................................................... 172
12 Dr. Reddy’s Laboratories International SA ....................................................................... 193
13 Dr. Reddy’s Bio-Sciences Limited .................................................................................... 206
14 Dr. Reddy’s Laboratories, LLC Ukraine ............................................................................ 222
15 Dr. Reddy’s Laboratories New York, Inc. ......................................................................... 236
16 Dr. Reddy’s Laboratories Romania -SRL ......................................................................... 251
17 Dr. Reddy’s Laboratories Tennessee, LLC ...................................................................... 265
18 Dr. Reddy’s New Zealand Limited (formerly Affordable Healthcare Limited) .................... 279
19 Dr. Reddy’s Pharma SEZ Limited..................................................................................... 293
20 Dr. Reddy’s Srl (formerly Jet Generici Srl) ........................................................................ 307
21 Dr. Reddy’s Venezuela, C.A. ............................................................................................ 322
22 Dr.Reddy’s Laboratories (Australia) Pty. Limited .............................................................. 333
23 Dr.Reddy’s Laboratories (EU) Limited .............................................................................. 349
24 Dr.Reddy’s Laboratories (UK) Limited .............................................................................. 366
25 Dr.Reddy’s Laboratories ILAC TICARET Limited SIRKETI .............................................. 382
26 Dr.Reddy’s Laboratories Louisiana LLC ........................................................................... 390
27 Dr.Reddy’s Laboratories SA, Switzerland ........................................................................ 407
28 DRL Impex Limited (formerly DRL Investments Limited) .................................................. 425
29 Euro Bridge Consulting BV ............................................................................................... 443
30 Idea2Enterprises (India) Private Limited .......................................................................... 453
31 Industrias Quimicas Falcon de Mexico, S.A. de CV ......................................................... 468
32 Kunshan Rotam Reddy Pharmaceutical Company Limited .............................................. 486
33 Lacock Holdings Limited .................................................................................................. 501
34 OctoPlus Development B.V. ............................................................................................. 514
35 OctoPlus N.V. ................................................................................................................... 528
36 OctoPlus PolyActive Sciences B.V. .................................................................................. 542
37 OctoPlus Sciences B.V. ................................................................................................... 552
38 OctoPlus Technologies B.V. ............................................................................................. 565
39 OctoShare B.V. ................................................................................................................ 576
40 OOO Alfa (formerly OOO JV Reddy Biomed Limited) ...................................................... 590
41 OOO Dr. Reddy’s Laboratories Limited ............................................................................ 600
42 OOO DRS LLC ................................................................................................................. 616
43 Promius Pharma LLC (formerly Reddy Pharmaceuticals Inc) .......................................... 627
44 Reddy Antilles N.V. .......................................................................................................... 642
45 Reddy beta GmbH ( formerly beta Healthcare Solutions GmbH ) .................................... 653
46 Reddy Cheminor S.A. ....................................................................................................... 663
47 Reddy Holding GmbH ...................................................................................................... 673
48 Reddy Netherlands BV ..................................................................................................... 685
49 Reddy Pharma Iberia SA .................................................................................................. 697
50 Reddy Pharma Italia S.p.A ............................................................................................... 709
51 Reddy Pharmaceuticals Hong Kong Limited .................................................................... 723
52 Reddy US Therapeutics Inc. ............................................................................................ 732
53 Trigenesis Therapeutics Inc. ............................................................................................ 743
Aurigene Discovery Technologies Malaysia SDN BHD . 1
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012
Profit for the period after taxation 14,324 14,187Balance brought forward (20,831) (35,018)Balance carried forward to Balance Sheet (6,507) (20,831)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of profit of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place : Hyderabad Palanivel Sathasivam CSN MurthyDate : 10 May 2013 Director Director
DIRECTORS’ REPORT
Aurigene Discovery Technologies Malaysia SDN BHD . 2
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Aurigene Discovery Technologies(Malaysia) SDN BHD., a company incorporated and administered outside India, which comprise theBalance Sheet as at 31 March 2013, and the Statement of Profit and Loss for the year ended, and asummary of significant accounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act,1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Aurigene Discovery Technologies Malaysia SDN BHD . 3
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Aurigene Discovery Technologies Malaysia SDN BHD . 4
(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 15,604 15,604Reserves and surplus 2.2 (6,505) (20,829)
9,099 (5,225)Non current liabilitiesLong term borrowings 2.3 8,615 33,470
8,615 33,470Current liablitiesTrade payables 2.4 89,115 25,998Other current liabilities 2.5 83,443 6,869
172,558 32,867
TOTAL 190,272 61,112
ASSETSNon current assetsFixed assets Tangible assets 2.6 17,722 20,979 Capital work-in-progress - 245Long term loans and advances 2.7 1,413 1,008
19,135 22,232Current assetsCash and bank balances 2.8 170,084 38,262Short term loans and advances 2.9 1,053 618
171,137 38,880
TOTAL 190,272 61,112Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
Palanivel Sathasivam C S N MurthyA. Ramachandra Rao Director DirectorPartnerMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Aurigene Discovery Technologies Malaysia SDN BHD . 5
(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeService income 348,801 152,937Other operating revenues 1,252 -
Revenue from operations 350,053 152,937Other income 2.10 979 3,114
Total revenue 351,032 156,051
ExpensesCost of material consumed (including packingmaterial consumed) 295,697 117,933Employee benefits expense 2.11 12,395 7,016Depreciation and amortization expense 2.6 5,080 4,287Other expenses 2.12 23,536 12,628
Total expenses 336,708 141,864
Profit before tax 14,324 14,187Tax expense Current tax - - Deferred tax - -
Profit for the year 14,324 14,187
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
Palanivel Sathasivam C S N MurthyA. Ramachandra Rao Director DirectorPartnerMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Aurigene Discovery Technologies Malaysia SDN BHD . 6
Note 1: Significant accounting policies(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under Section 211(3C) ofCompanies Act, 1956, other pronouncements of Institute of Chartered Accountants of Indiaand provisions of Companies Act, 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with Section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
Aurigene Discovery Technologies Malaysia SDN BHD . 7
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
Current assets/ liabilities include the current portion of non-current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non-current.
d) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intendeduse, as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of tangible fixed assets aregiven below:
YearsLaboratory equipment 4 to 10Furniture, fixtures and office equipment(other than computer equipment) 3 to 5
e) Retirement benefits
Contributions payable to employee pension and social security schemes, which are definedcontribution schemes, are charged to the profit and loss account..
f) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the datesof the respective transactions. Exchange differences arising on foreign currency transactionssettled during the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
g) Revenue recognition
Service income
Revenue from services rendered, which primarily relate to contract research, is recognized inthe statement of profit and loss as the underlying services are performed. Upfront non-refundablepayments received under these arrangements are deferred and recognised as revenue overthe expected period over which the related services are expected to be performed.
Aurigene Discovery Technologies Malaysia SDN BHD . 8
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on timeproportion method.
h) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Aurigene Discovery Technologies Malaysia SDN BHD . 9
(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capital
Authorised1,000,000 (previous year 1,000,000 ) shares of MYR 1 each 15,604 15,604
Issued1,000,000 (previous year 1,000,000) shares of MYR 1 each 15,604 15,604
Subscribed and paid-up1,000,000 (previous year 1,000,000) shares of MYR 1 each 15,604 15,604
15,604 15,604
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 1,000,000 15,604 100,000 1,239Shares issued during the year - - 900,000 14,365
Number of shares outstandingat the end of the year 1,000,000 15,604 1,000,000 15,604
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of MYR 1 per share. Eachholder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012
Particulars No. of Equity % equity No. of Equity % equityshares held shares held shares held shares held
Aurigene Discovery 1,000,000 100 1,000,000 100Technologies Limited
Notes to Financial Statements
Note 2 : Notes to financial statements
Aurigene Discovery Technologies Malaysia SDN BHD . 10
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplus
Foreign currency translation reserveBalance at the beginning of the year 2 -Additions / (deductions) during the year - 2
2 2
DeficitBalance at the beginning of the year (20,831) (35,018)Add: Current year profit 14,324 14,187
Balance carried forward (6,507) (20,831)
(6,505) (20,829)
2.3 : Long term borrowingsBorrowings from holding company and other group companies 8,615 33,470
8,615 33,470
2.4 : Trade PayablesPayables to holding company and other group companies 89,014 25,998Payables to others 101 -
89,115 25,998
2.5 : Other Current liabilitiesAccrued expenses 2,628 -Other current liabilities 80,815 6,869
83,443 6,869
Aurigene D
iscovery Technologies M
alaysia SD
N B
HD
.11
Notes to F
inancial Statem
ents2.6 : Fixed assets (All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Gross Block Depreciation Net Block
Description As at Additions Deletions Forex As at As at For the Deletions Forex As at As at As at01.04.2012 31.03.2013 01.04.2012 Year 31.03.2013 31.03.2013 31.03.2012
Electrical Equipment 377 5 5 - 377 171 65 5 - 231 146 206
Lab equipment 28,235 697 390 - 28,542 7,608 4,757 382 - 11,983 16,559 20,627
Office equipment 5,352 1,133 24 - 6,461 5,206 258 21 - 5,443 1,017 146
Total 33,964 1,834 419 - 35,380 12,985 5,080 408 - 17,657 17,722 20,979
Previous Year 28,620 5,344 - - 33,964 8,698 4,287 - - 12,985 20,979
Note 2 : Notes to Financial Statements (Continued)
Aurigene Discovery Technologies Malaysia SDN BHD . 12
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.7 : Long term loans and advances(Unsecured)Considered goodSecurity Deposits 1,413 1,008
1,413 1,008
2.8 : Cash and bank balancesCash on hand - -Bank balances In current accounts 170,084 38,262
170,084 38,262
2.9 : Short term loans and advances(Unsecured)Considered goodAdvances to material suppliers 654 429Prepaid expenses 224 22Other Advances 175 167
1,053 618
Aurigene Discovery Technologies Malaysia SDN BHD . 13
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.10 : Other incomeInterest income 13 12Foreign exchange gain, net 966 3,102
979 3,114
2.11 : Employee benefits expenseSalaries, wages and bonus 10,715 6,147Contribution to provident and other funds 1,296 776Staff welfare expenses 384 93
12,395 7,016
2.12 : Other expenseLegal and professional 13,940 7,587Carriage outward 54 -Rates and taxes 10 42Repairs and maintenance Plant and machinery 10 - Others 3,262 183Power and fuel 331 289Travelling and conveyance 1,298 596Communication 780 529Rent 3,037 2,718Insurance 1 30Printing and stationery 209 167Bank charges 50 40Miscellaneous 554 447
23,536 12,628
Aurigene Discovery Technologies Malaysia SDN BHD . 14
2.13: Related party disclosure:
The Company has following amounts due from/to related parties:
As at As atParticulars 31 March 2013 31 March 2012
i. Due to related parties(included in Long term borrowings):Aurigene Discovery Technologies Ltd 8,615 33,470
ii. Due to related parties(included in Trade payables)Aurigene Discovery Technologies Ltd 89,014 25,998
2.14: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.15: The Company incorporated in Malaysia, is a 100% subsidiary of Aurigene DiscoveryTechnologies Ltd.,
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
Palanivel Sathasivam C S N MurthyA. Ramachandra Rao Director DirectorPartnerMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
Aurigene Discovery Technologies Inc 15
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012
Loss for the period after taxation (9,641) (723)Balance brought forward (222,692) (221,969)Balance carried forward to Balance Sheet (232,333) (222,692)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followed alongwith proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company for thatperiod;
3. We have taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of this Act for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place : Hyderabad G V Prasad Satish ReddyDate : 10 May 2013 Director Director
DIRECTORS’ REPORT
Aurigene Discovery Technologies Inc 16
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Aurigene Discovery Technologies Inc.,a company incorporated and administered outside India, which comprise the Balance Sheet as at 31March 2013, and the Statement of Profit and Loss for the year ended, and a summary of significantaccounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act,1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicable andrelevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carried outfor the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by management, as well as evaluating the overall presentation of thefinancial statements. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013; and
(b) in the case of the Statement of Profit and Loss, of the Loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
b. in our opinion proper books of account as required by law have been kept by the Company so faras appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
AUDITORS’ REPORT
Aurigene Discovery Technologies Inc 17
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreement withthe books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to the extentapplicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Aurigene Discovery Technologies Inc 18
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 210,307 210,307Reserves and surplus 2.2 (233,865) (223,357)
(23,558) (13,050)
Non-current liabilitiesLong term borrowings 2.3 28,500 12,719
28,500 12,719Current liablitiesOther current liabilities 2.4 2,984 2,517
2,984 2,517
TOTAL 7,926 2,186
ASSETSCurrent assetsCash and bank balances 2.5 7,926 2,186
7,926 2,186
TOTAL 7,926 2,186
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao G.V. Prasad Satish ReddyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Aurigene Discovery Technologies Inc 19
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
Income
Other income 2.6 9 -
Total revenue 9 -
ExpensesEmployee benefits expense 2.7 5,617 -Other expenses 2.8 4,033 723
Total expenses 9,650 723
Profit / (Loss) before tax (9,641) (723)Tax expense Current tax - - Deferred tax - -
Profit / (Loss) for the year (9,641) (723)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao G.V. Prasad Satish ReddyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Aurigene Discovery Technologies Inc 20
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) of CompaniesAct 1956, other pronouncements of Institute of Chartered Accountants of India and provisions ofCompanies Act, 1956.
The financial statements have been prepared based on books, records and other returns maintainedby the subsidiary. The financial statements have been presented in Indian Rupees, for thelimited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation of usefullife of tangible and intangible assets, assessment of recoverable amounts of deferred tax assets,provision for obligations relating to employees, provisions against litigations and impairment ofassets. Actual results could differ from these estimates. Estimates and underlying assumptionsare reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectivelyin the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
Notes to Financial Statements
Aurigene Discovery Technologies Inc 21
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability for atleast 12 months after the reporting date. Terms of a liability that could, at the option of thecounterparty, result in its settlement by the issue of equity instruments do not affect itsclassification.
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
c) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactionssettled during the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
d) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of past eventsand it is probable that an outflow of resources embodying economic benefits will be required tosettle the obligation. Provisions are recognised at the best estimate of the expenditure requiredto settle the present obligation at the balance sheet date. Provisions are measured on anundiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certain thatan inflow of economic benefits will arise, the asset and related income are recognised in theperiod in which the change occurs.
Notes to Financial Statements
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Aurigene Discovery Technologies Inc 22
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised6,000,000 (previous year: 6,000,000) Equity shares of USD 1 each 276,000 276,000
Issued4,400,000 (previous year: 4,400,000) Equity shares of USD 1 each 210,307 210,307
Subscribed and paid-up4,400,000 (previous year: 4,400,000) Equity shares of USD 1 each 210,307 210,307
210,307 210,307
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 4,400,000 210,307 4,400,000 210,307Add: Share issued during the year - - - -
Number of shares outstandingat the end of the year 4,400,000 210,307 4,400,000 210,307
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of USD 1 per share. Eachholder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012
Particulars No. of Equity % equity No. of Equity % equityshares held shares held shares held shares held
Aurigene Discovery Technologies Limited 4,400,000 100 4,400,000 100
Notes to Financial Statements
Note 2 : Notes to financial statements
Aurigene Discovery Technologies Inc 23
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year (665) 865Additions / (deductions) during the year (867) (1,530)
(1,532) (665)
DeficitBalance at the beginning of the year (222,692) (221,969)Add: Current year loss (9,641) (723)
Balance carried forward (232,333) (222,692)
(233,865) (223,357)
2.3 : Long term borrowingsBorrowings from holding company and other group companies 28,500 12,719
28,500 12,719
2.4 Other current liabilitiesDue to holding company and other group companies 1,093 2,442Accrued expenses 1,890 75Other current liabilities 1 -
2,984 2,517
2.5 : Cash and bank balancesCash on hand - -Bank balances In current accounts 7,926 2,186
7,926 2,186
Aurigene Discovery Technologies Inc 24
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.6 : Other incomeInterest income 9 -
9 -
2.7 : Employee benefits expenseSalaries, wages and bonus 5,617 -
5,617 -
2.8 : Other expenseLegal and professional 2,799 73Rates and taxes 22 -Travelling and conveyance 550 -Bank charges 8 46Miscellaneous 654 604
4,033 723
Aurigene Discovery Technologies Inc 25
Notes to Financial Statements
Note 2: Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
2.9. Related party disclosures
The Company has following amounts due from/to related parties:
As at As atParticulars 31 March 2013 31 March 2012
i. Due to related parties(included in Other Current Liabilities):Dr. Reddy’s Laboratories Inc. 1,093 2,442
ii. Due to related parties(included in Long term borrowings):Aurigene Discovery Technologies Limited 28,500 12,719
2.10. Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.11. The Company incorporated in the United States of America, is a 100% subsidiary of AurigeneDiscovery Technologies Ltd.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao G.V. Prasad Satish ReddyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Aurigene Discovery Technologies Limited 26
Dear Members,
Your Directors present the 12th Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Lakhs)
Particulars 31 March 2013 31 March 2012
Income 16,376 16,802Profit Before Tax 5,624 4,859Tax Expenses 1,903 1,600Profit After Tax 3,721 3,259Proposed Dividend on 8% Cumulative Preference Shares 118 276Tax on dividend 20 45Transfer to general reserve - 244Net Profit 3,583 2,693Loss brought forward (708) (3,402)Profit (Loss) carried forward to Balance Sheet 2,875 (708)
Dividend
Your Directors recommend dividend on 8% Cumulative Redeemable Preference Shares accumulatedtill the financial year ending 31 March 2013. The total accumulated dividend works out to ̀ 118 lakhs.
Subsidiary Companies
The Company has two wholly owned subsidiaries, namely M/s. Aurigene Discovery TechnologiesInc. and M/s. Aurigene Discovery Technologies (Malaysia) Sdn Bhd as on 31 March 2013. Thedocuments / statement, pursuant to the provision of Section 212(1) of the Companies Act, 1956 areattached to the Balance Sheet of your Company.
Share capital
During the year under review, there was no change in the share capital of the Company.
Directors
Mr. G V Prasad, retires by rotation at the ensuing Annual General Meeting scheduled to be held on 29July 2013, and being eligible seeks re-appointment. Your Directors recommend his re-appointmentfor your approval at the ensuing AGM.
Mr. Umang Vohra has resigned from the Board of Directors of the Company with effect from 18January 2013. The Board accorded its deep appreciation for the services rendered by him during histerm.
The Board of Directors had appointed Mr. Saumen Chakraborty as an Additional Director on theBoard of Directors of the Company effective 16 January 2013. He will hold this office till the conclusionof the 12th Annual General Meeting of the Company. Requisite notice under Section 257 of theCompanies Act, 1956 has been received from a member proposing his appointment. It is proposed to
DIRECTORS’ REPORT
Aurigene Discovery Technologies Limited 27
appoint him as a Director of the Company liable to retire by rotation. The resolution for the same hasbeen included in the notice of the 12th Annual General Meeting of the Company.
Audit Committee
The Audit Committee consists of Mr. G.V. Prasad, Mr. Satish Reddy and Mr. Saumen Chakraborty asmembers of the Committee. All the members of the Audit Committee are non-executive Directors andone of them is having financial and accounting knowledge. The Audit Committee met three timesduring the year: on 1 May 2012, 10 October 2012 and 18 January 2013.
The functions of the Audit Committee are to:
a) Hold discussions with the Auditors periodically about internal control systems and the scope ofaudit including observations of the auditors;
b) Review of the half-yearly and annual financial statements before submission to the Board; and
c) Ensure the compliance of internal control systems in the Company.
Auditors
The Statutory Auditors of the Company M/s B S R & Co., Chartered Accountants, Bangalore, retire atthe ensuing 12th Annual General Meeting and have confirmed their eligibility and willingness to acceptoffice of Auditors, if re-appointed. The Audit Committee and the Board of Directors recommend re-appointment of M/s B S R & Co., Chartered Accountants, Bangalore, as Statutory Auditors of theCompany for the financial year 2013-14 for shareholder’s approval.
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of profit of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on an on-going concern basis.
Particulars of Employees
Pursuant to the provisions of Section 217(2A) of the Companies Act, 1956 read with Companies(Particulars of Employees) Rules, 1975 as amended, the names and other particulars of employeesare set out in the Annexure – 1 to the Directors’ Report.
Conservation of energy and technology absorption
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy and technology absorption are not applicable to your Company.
Aurigene Discovery Technologies Limited 28
Foreign exchange earnings and outgo
Please refer information given in the notes to the Annual Accounts of the Company in Schedule 22Notes on accounts item no. ‘b’ to item no. ‘e’.
Acknowledgement
Your Directors place on record their sincere appreciation for significant contribution made by theemployees through their dedication, hard work and commitment. We also acknowledge the supportextended to us by the bankers, government agencies and shareholder to the Company during theyear.
for and on behalf of the Board of Directors
Place : Hyderabad G V Prasad Satish ReddyDate : 26 April 2013 Director Director
Aurigene Discovery Technologies Limited 29
ANNEXURE-I TO DIRECTORS’ REPORT
Aurigene Discovery Technologies Limited 30
AUDITOR’S REPORT
To
The MembersAurigene Discovery Technologies LimitedBangalore.
Report on the Financial Statements
We have audited the accompanying financial statements of Aurigene Discovery TechnologiesLimited (“the Company”), which comprise the Balance Sheet as at 31 March 2013 and the Statementof Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significantaccounting policies and other explanatory information.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation of these financial statements that give a true and fairview of the financial position, financial performance and cash flows of the Company in accordancewith the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act,1956 (“the Act”). This responsibility includes the design, implementation and maintenance of internalcontrol relevant to the preparation and presentation of the financial statements that give a true and fairview and are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with the Standards on Auditing issued by the Institute of CharteredAccountants of India. Those Standards require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether the financial statements are freefrom material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made by management,as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion
Opinion
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;
(ii) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
Aurigene Discovery Technologies Limited 31
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the CentralGovernment of India in terms of sub-section (4A) of section 227 of the Act, we give in theAnnexure a statement on the matters specified in paragraphs 4 and 5 of the Order.
2. As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledgeand belief were necessary for the purpose of our audit;
b. in our opinion proper books of account as required by law have been kept by the Companyso far as appears from our examination of those books;
c. the Balance Sheet, Statement of Profit and Loss and Cash Flow Statement dealt with bythis Report are in agreement with the books of account;
d. in our opinion, the Balance Sheet, Statement of Profit and Loss and Cash Flow Statementcomply with the Accounting Standards referred to in subsection (3C) of section 211 ofthe Companies Act, 1956; and
e. on the basis of written representations received from the directors as on 31 March 2013,and taken on record by the Board of Directors, none of the directors are disqualified ason 31 March 2013, from being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956.
For B S R & Co.Chartered Accountants
Firm Reg. No. 101248W
Zubin ShekaryPlace : Bangalore PartnerDate : 26 April 2013 Membership No. 048814
Aurigene Discovery Technologies Limited 32
The Annexure referred to in our report to the members of Aurigene Discovery Technologies Limited(“the Company”) for the year ended 31 March 2013. We report that:
(i) (a) The Company has maintained proper records showing full particulars including quantitativedetails and situation of fixed assets.
(b) The Company has a regular programme of physical verification of its fixed assets bywhich all fixed assets are verified over a period of three years. In our opinion, the periodicityof physical verification is reasonable having regard to the size of the Company and thenature of its assets. No material discrepancies were noticed on such verification.
(c) Fixed assets disposed of during the year were not substantial, and therefore, do notaffect the going concern assumption.
(ii) (a) The inventory of consumables has been physically verified by the management duringthe year. In our opinion, the frequency of such verification is reasonable.
(b) The procedures of physical verification of consumables followed by the managementare reasonable and adequate in relation to the size of the Company and the nature of itsbusiness.
(c) The Company is maintaining proper records of inventories. The discrepancies noticedon verification between the physical stocks and the book records were not material.
(iii) The Company has neither granted nor taken any loans, secured or unsecured, to or fromcompanies, firms or other parties covered in the register maintained under section 301 of theCompanies Act, 1956.
(iv) In our opinion and according to the information and explanations given to us, and having regardto the explanation that the services provided by the Company are for the specialized requirementsof the customer and suitable alternative sources are not available to obtain comparablequotations, there is an adequate internal control system commensurate with the size of theCompany and the nature of its business with regard to sale of services. The activities of theCompany, during the year, did not involve sale of goods. We have not observed any majorweakness in internal control system during the course of the audit.
(v) (a) In our opinion and according to the information and explanations given to us, the particularsof contracts or arrangements referred to in section 301 of the Companies Act, 1956 havebeen entered in the register required to be maintained under that section.
(b) In our opinion, and according to the information and explanations given to us, thetransactions made in pursuance of contracts and arrangements referred above havebeen made at prices which are reasonable having regard to the prevailing market pricesat the relevant time, except for services provided by the Company for the specializedrequirements of the buyers and for which suitable alternative sources are not availableto obtain comparable quotations. However, on the basis of information and explanationsprovided, the same appear reasonable.
(vi) The Company has not accepted any deposits from the public.
(vii) In our opinion, the Company has an internal audit system commensurate with the size andnature of its business.
(viii) The Central Government of India has not prescribed the maintenance of cost records undersection 209(1)(d) of the Companies Act, 1956 in respect of services rendered by the Company.
Annexure to the Auditors’ Report
Aurigene Discovery Technologies Limited 33
(ix) (a) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company, amounts deducted/accrued in the books ofaccount in respect of undisputed statutory dues including Provident Fund, Income-tax,Sales-tax, Service tax, Customs duty, Cess and other material statutory dues havegenerally been regularly deposited with the appropriate authorities. As explained to us,the Company did not have any dues on account of Investor Education and ProtectionFund, Wealth tax and Excise duty. We are informed that the provisions of the Employees’State Insurance Act, 1948 (“ESI”) are not applicable to the Company.
According to the information and explanations given to us, no undisputed amounts payablein respect of Provident Fund, Income-tax, Sales-tax, Service tax, Customs duty, Cessand other material statutory dues were in arrears as at 31 March 2013 for a period ofmore than six months from the date they became payable.
(b) As explained to us, the Company has no dues of Income tax, Customs duty, Service taxand Cess which have not been deposited with the appropriate authorities on account ofany dispute except the following:
Name of the Nature of the Amount Period to Forum whereStatute Dues (Rs) which the dispute ispending
amount relates
Karnatka Sales Tax 1,063,203* Assessment KarnatakaSales Tax Act Demand year 2001-02 Appellate Tribunal
and 2002-03
*Rs.1,063,203 payment has been made under protest to the sales tax authorities.
(x) The Company does not have accumulated losses at the end of the financial year and has notincurred cash losses in the financial year and in the immediately preceding financial year.
(xi) The Company did nothave outstanding dues to any financial institution, bank or debentureholders during the year.
(xii) The Company has not granted any loans and advances on the basis of security by way ofpledge of shares, debentures and other securities.
(xiii) In our opinion and according to the information and explanations given to us, the Company isnot a chit fund or a nidhi/ mutual benefit fund/ society.
(xiv) According to the information and explanations given to us, the Company is not dealing ortrading in shares, securities, debentures and other investments.
(xv) According to the information and explanations given to us, the Company has not given anyguarantee for loans taken by others from banks or financial institutions.
(xvi) In our opinion and according to the information and explanations given to us, no term loanswere taken by the Company during the year.
(xvii) According to the information and explanations given to us and on an overall examination of thebalance sheet of the Company, we are of the opinion that funds raised on short-term basishave not been used for long-term investment.
Aurigene Discovery Technologies Limited 34
(xviii) The Company has not made any preferential allotment of shares to companies/firms/partiescovered in the register maintained under Section 301 of the Act.
(xix) The Company did not have any outstanding debentures during the year.
(xx) The Company has not raised any money by public issues during the year.
(xxi) According to the information and explanations given to us, no fraud on or by the Company hasbeen noticed or reported during the course of our audit.
For B S R & Co.Chartered Accountants
Firm Reg. No. 101248W
Zubin ShekaryPlace : Bangalore PartnerDate : 26 April 2013 Membership No. 048814
Aurigene Discovery Technologies Limited 35
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2 10,529 10,529Reserves and surplus 3 3,501 (81)
14,030 10,448Non-current liabilitiesOther long-term liabilities 4 - 666Long-term provisions 5 - 239
- 905Current liabilitiesTrade payables 6 682 1,079Other current liabilities 7 450 392Short-term provisions 8 2,054 2,003
3,186 3,474
TOTAL 17,216 14,827ASSETSNon-current assetsFixed assets 9- Tangible assets 5,876 6,412- Intangible assets 8 55- Capital work-in-progress 403 27
6,287 6,494
Non-current investments 10 156 156Deferred tax assets (net) 22(i) 66 254Long-term loans and advances 11 359 132
581 542Current assetsInventories 12 60 54Trade receivables 13 1,985 2,525Cash and bank balances 14 7,494 3,935Short-term loans and advances 15 665 729Other current assets 16 144 548
10,348 7,791
TOTAL 17,216 14,827Significant accounting policies 1Notes to financial statements 2 to 23
The accompanying notes are an integral part of financial statementsAs per our report of even date attachedfor B.S.R & Co. for and on behalf of the Board of DirectorsChartered AccountantsFirm registration no. 101248W G V Prasad Satish Reddy
Zubin ShekaryDirector Director
PartnerMembership No. 048814 Ashish LathPlace : Bangalore Director - Finance & ManagerDate : 26 April 2013
Balance Sheet
Aurigene Discovery Technologies Limited 36
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeRevenue from operations 17 15,956 16,696Other income 18 420 106
16,376 16,802
Employee benefits expense 19 4,238 4,446Finance costs 20 127 87Depreciation and amortization expense 9 1,043 1,127Other expenses 21 5,345 6,283
10,753 11,943
Profit before tax 5,623 4,859
Tax expense:- current tax/ minimum alternate tax (1,715) (1,157)- minimum alternate tax credit utilisation - (337)- deferred tax charge (188) (106)
Profit after tax 3,720 3,259
Earnings per share(equity shares, par value of `̀̀̀̀ 10 each) - Basic (Par value, ` 10 each) 22(j) 3.96 3.45 - Diluted (Par value, ` 10 each) 22(j) 3.96 3.45
Significant accounting policies 1Notes to financial statements 2 to 23
The accompanying notes are an integral part of financial statements
As per our report of even date attachedfor B.S.R & Co. for and on behalf of the Board of DirectorsChartered AccountantsFirm registration no. 101248W G V Prasad Satish Reddy
Director DirectorZubin ShekaryPartnerMembership No. 048814 Ashish Lath
Director - Finance & ManagerPlace : BangaloreDate : 26 April 2013
Statement of Profit and Loss
Aurigene Discovery Technologies Limited 37
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
For the For theParticulars year ended year ended
31 March 2013 31 March 2012
Cash flows from operating activitiesProfit before tax 5,623 4,859Adjustments:
Depreciation 1,043 1,127Provision for slow moving inventory (3) 3Provision for interest on income tax 127 86Unrealised foreign exchange gain oncash and cash equivalents (205) (90)Profit on sale of fixed assets/ assets discarded (2) (4)Interest income (406) (91)
Operating cash flows before working capital changes 6,177 5,890Decrease/(Increase) in trade receivables 540 (335)(Increase)/Decrease in inventories (3) 17Decrease/(Increase) in unbilled revenue 397 (212)Increase / (Decrease) in loans and advances (286) 37(Decrease)/ Increase in liabilities and provisions (1,562) (735)
Cash generated from operations 5,263 4,662Income-tax paid (1,285) (422)
Net cash provided by operating activities a 3,978 4,240Cash flows from investing activitiesPurchase of fixed assets (751) (1,078)Proceeds from sale of fixed assets 12 50Interest received 413 71Advances refunded by subsidiaries 269 202Advances given to subsidiaries (146) (144)Investment in fixed deposists having original maturityof more than 3 but less than 12 months. (6,380) (100)
Net cash used in investing activities b (6,583) (999)Cash flows from financing activitiesRepayment of short term borrowings - (265)Repayment of long term borrowings - (89)Dividend paid (276) -Tax on dividend (45) -
Net cash provided by financing activities c (321) (354)
Cash flow Statement
Aurigene Discovery Technologies Limited 38
Net (decrease) /increase in a+b+c (2,926) 2,887cash and cash equivalentsCash and cash equivalentsat the beginning of the year 3,835 858Effect of exchange loss oncash and cash equivalents 205 90
Cash and cash equivalents at the end of the year 1,114 3,835(Refer note 14)
Note 1: The above cash flow statement has been prepared in accordance with the ‘Indirect Method’as set out in the Accounting Standard (AS-3) on ‘Cash Flow Statements’, issued byCompanies (Accounting Standard) Rules, 2006.
Note 2: Figures in bracket indicate cash outflow.
As per our report of even date attachedfor B.S.R & Co. for and on behalf of the Board of DirectorsChartered AccountantsFirm registration no. 101248W G V Prasad Satish Reddy
Director DirectorZubin ShekaryPartnerMembership No. 048814 Ashish Lath
Director - Finance & ManagerPlace : BangaloreDate : 26 April 2013
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
For the For theyear ended year ended
31 March 2013 31 March 2012
Cash flow Statement (Continued)
Aurigene Discovery Technologies Limited 39
Notes to Financial Statements
1. Significant accounting policies(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Background
Aurigene Discovery Technologies Limited (‘Aurigene’ or ‘the Company’) was incorporated as a PrivateLimited Company on 10 August 2001. Subsequently, on 13 November 2001, the Company wasconverted into a Public Limited Company. The Company is promoted by Dr. Reddy’s LaboratoriesLimited (‘DRL’) and is a wholly owned subsidiary of DRL. The main business activity of the Companyis to undertake research relating to drug discovery for its customers. The Company commenced itscommercial operations from 1 April 2003.
a) Basis of preparation of financial statements
The financial statements of the Company have been prepared and presented in accordancewith the Indian Generally Accepted Accounting Principles (GAAP) under the historical costconvention on the accrual basis. GAAP comprises accounting standards notified by the CentralGovernment of India under Section 211 (3C) of the Companies Act, 1956, and otherpronouncements of Institute of Chartered Accountants of India and the provisions of CompaniesAct, 1956. The financial statements are rounded off to the nearest Indian Rupees lakhs.
b) Current–non current classificationAll assets and liabilities are classified into current and non current.
Assets
An asset is classified as current when it satisfies any of the following criteria:
a. it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b. it is held primarily for the purpose of being traded;
c. it is expected to be realised within 12 months after the reporting date; or
d. it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date. Current assets include the currentportion of non-current financial assets.
All other assets are classified as non current.
Liabilities
A liability is classified as current when it satisfies any of the following criteria:
a. it is expected to be settled in the Company’s normal operating cycle;
b. it is held primarily for the purpose of being traded;
c. it is due to be settled within 12 months after the reporting date; or
d. the company does not have an unconditional right to defer settlement of the liability for atleast 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification. Current liabilities include current portion of non-current financial liabilities.
All other liabilities are classified as non-current.
Operating cycle
Operating cycle is the time between the acquisition of assets for processing and their realisationin cash or cash equivalents.
Aurigene Discovery Technologies Limited 40
c) Use of estimates
The preparation of financial statements in conformity with GAAP requires management to makeestimates and assumptions that affect the reported amount of assets and liabilities and thedisclosure relating to contingent liabilities on the date of the financial statements. Actual resultscould differ from those estimates. Any revision to accounting estimates is recognizedprospectively in the current and future periods.
d) Inventories
Consumables are valued at cost. Cost comprises purchase price and all incidental expensesincurred in bringing the inventory to its present location and condition. Cost is determined onthe weighted average method.
e) Revenue recognition
The Company derives its revenue from business contracts with customers to carry out researchrelated work. Revenue from services rendered, which primarily relate to contract research, isrecognized in the statement of profit or loss as the underlying services are performed. Upfrontnon-refundable payments received under these arrangements are deferred and recognized asrevenue over the expected period over which the related services are expected to be performed.
Revenue earned in excess of billing has been reflected as unbilled revenues in the balancesheet.
Interest on deployment of funds is recognized using the time proportion method, based onunderlying interest rates.
f) Fixed assets and depreciation
Fixed assets are carried at cost of acquisition or construction, less accumulated depreciationand impairment loss, if any. The cost of fixed assets includes freight, duties, taxes and otherincidental expenses related to the acquisition of respective assets. Acquired intangible assetsare recorded at the consideration paid for acquisition. Application software purchased is fullywritten off in the year of purchase.
Depreciation on fixed assets is provided on a straight line method. The rates of depreciationprescribed in Schedule XIV to the Companies Act, 1956 are considered as the minimum rates.If the management’s estimate of the useful life of a fixed asset at the time of acquisition of theasset or of the remaining useful life on a subsequent review is shorter than that envisaged inthe aforesaid schedule, depreciation is provided at a higher rate based on the management’sestimate of the useful life or remaining useful life. Pursuant to this policy, depreciation onassets has been provided at the rates based on the following useful lives of fixed assets asestimated by management:
Asset Description Useful lifeBuildings 30 yearsLaboratory equipment 8 yearsElectrical equipment 8 yearsPlant and machinery – others 8 yearsComputers 3 yearsOffice equipment 8 yearsFurniture and fixtures 8 years
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Aurigene Discovery Technologies Limited 41
Vehicles 5 yearsTechnical know-how 3 years
Depreciation is charged on a time proportionate basis for all assets purchased and sold duringthe year. Individual assets costing less than Rs. 5,000 are depreciated in full in the year ofpurchase.
Cost of fixed assets not ready for intended use at the balance sheet date is disclosed undercapital work-in-progress
g) Borrowing costs
Borrowing costs directly attributable to acquisition or construction of those fixed assets whichnecessarily take a substantial period of time to get ready for their intended use are capitalised.
h) Impairment of assets
The Company periodically assesses whether there is any indication that an asset or a group ofassets comprising a cash generating unit may be impaired. If any such indication exists, theCompany estimates the recoverable amount of the asset. For an asset or group of assets thatdoes not generate largely independent cash inflows, the recoverable amount is determined forthe cash-generating unit to which the asset belongs. If such recoverable amount of the assetor the recoverable amount of the cash generating unit to which the asset belongs is less thanits carrying amount, the carrying amount is reduced to its recoverable amount. The reduction istreated as an impairment loss and is recognised in the statement of profit and loss. If at thebalance sheet date there is an indication that if a previously assessed impairment loss nolonger exists, the recoverable amount is reassessed and the asset is reflected at the recoverableamount subject to a maximum of depreciable historical cost. An impairment loss is reversedonly to the extent that the carrying amount of asset does not exceed the net book value thatwould have been determined; if no impairment loss had been recognised.
i) Foreign currency transactions
Foreign currency transactions during the year are recorded at the exchange rate prevailing onthe date of the transaction. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated at the exchange rates on that date, the resultant exchange differences arerecognized in the statement of profit and loss.
Derivative instruments
The Company uses derivatives to hedge its foreign currency risk exposure relating to firmcommitments and highly probable transactions. In accordance with the relevant announcementof the Institute of Chartered Accountants of India, the Company provides for losses in respectof such outstanding derivative contracts at the balance sheet date by marking them to market.Net gain, if any, is not recognized. The contracts are aggregated category-wise, to determinethe net gain/loss.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Aurigene Discovery Technologies Limited 42
j) Employee benefits
Short-term employee benefits
Employee benefits payable wholly within twelve months of receiving employee services areclassified as short-term employee benefits. These benefits include salaries and wages, bonusand ex-gratia. The undiscounted amount of short-term employee benefits to be paid in exchangefor employee services is recognised as an expense as the related service is rendered byemployees.
Post-employment benefits
Define contribution plan
A defined contribution plan is a post-employment benefit plan under which an entity pays specifiedcontributions to a separate entity and has no obligation to pay any further amounts. The Companymakes specified monthly contributions towards employee provident fund to Governmentadministered provident fund scheme which is a defined contribution plan.The Company’scontribution is recognised as an expense in the statement of profit and loss during the period inwhich the employee renders the related service.
Defined benefit plans
The Company’s gratuity benefit scheme is a defined benefit plan. The Company’s net obligationin respect of a defined benefit plan is calculated by estimating the amount of future benefit thatemployees have earned in return for their service in the current and prior periods; that benefit isdiscounted to determine its present value. Any unrecognised past service costs and the fairvalue of any plan assets are deducted. The calculation of the Company’s obligation under theplans is performed annually by a qualified actuary using the projected unit credit method.
The Company recognises all actuarial gains and losses arising from defined benefit plansimmediately in the statement of profit and loss. All expenses related to defined benefit plansare recognised in employee benefits expense in the statement of profit and loss. When thebenefits of a plan are improved, the portion of the increased benefit related to past service byemployees is recognised in statement of profit and loss on a straight-line basis over the averageperiod until the benefits become vested. The Company recognises gains and losses on thecurtailment or settlement of a defined benefit plan when the curtailment or settlement occurs.
Compensated Absences
Leave encashment payable to employees is accrued every month and the payment is madeonce in every year without carrying forward the liability beyond 12 month.
k) Investments
Investments that are readily realisable and intended to be held for not more than a year fromthe date of acquisition are classified as current investments. All other investments are classifiedas long-term investments. However, that part of long term investments which is expected to berealised within 12 months after the reporting date is also presented under ‘current assets’ as“current portion of long term investments” in consonance with the current/non-currentclassification scheme of revised Schedule VI.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Aurigene Discovery Technologies Limited 43
Long-term investments (including current portion thereof) are carried at cost less any other-than-temporary diminution in value, determined separately for each individual investment.
Current investments are carried at the lower of cost and fair value. The comparison of cost andfair value is done separately in respect of each category of investments i.e., equity shares,preference shares, convertible debentures etc.
Any reductions in the carrying amount and any reversals of such reductions are charged orcredited to the Statement of Profit and Loss. Long term investments are carried at cost lessother-than-temporary diminution in value, determined separately for each individual investment.
l) Leases
Assets acquired under leases other than finance leases are classified as operating leases. Thetotal lease rentals (including scheduled rental increases) in respect of an asset taken on operatinglease are charged to the Statement of Profit and Loss on a straight line basis over the leaseterm unless another systematic basis is more representative of the time pattern of the benefit.Initial direct costs incurred specifically for an operating lease are deferred and charged to theStatement of Profit and Loss over the lease term.
Assets given by the Company under operating lease are included in fixed assets. Lease incomefrom operating leases is recognised in the Statement of Profit and Loss on a straight line basisover the lease term unless another systematic basis is more representative of the time patternin which benefit derived from the leased asset is diminished. Costs, including depreciation,incurred in earning the lease income are recognised as expenses. Initial direct costs incurredspecifically for an operating lease are deferred and recognised in the Statement of Profit andLoss over the lease term in proportion to the recognition of lease income.
m) Earnings per share
The basic earnings per share is computed by dividing the net profit attributable to the equityshareholders for the year by the weighted average number of equity shares outstanding duringthe year. The number of shares used in computing diluted earnings per share comprises theweighted average number of shares considered for deriving basic earnings per share and alsothe weighted average number of equity shares, which could have been issued on the conversionof all dilutive potential shares. In computing dilutive earnings per share, only potential equityshares that are dilutive and that decrease profit per share are included.
n) Taxation
Income-tax expense comprises current tax (i.e. amount of tax for the year determined inaccordance with the income-tax law) and deferred tax charge or credit (reflecting the tax effectsof timing differences between accounting income and taxable income for the year). The deferredtax charge or credit and the corresponding deferred tax liabilities or assets are recognizedusing the tax rates that have been enacted or substantively enacted by the balance sheet date.Deferred tax assets are recognized only to the extent there is reasonable certainty that theassets can be realized in future; however, where there is unabsorbed depreciation or carryforward of business losses under taxation laws, deferred tax assets are recognized only if thereis a virtual certainty of realization of such assets. Deferred tax assets are reviewed as at each
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Aurigene Discovery Technologies Limited 44
balance sheet date and written down or written-up to reflect the amount that is reasonably/virtually certain (as the case may be) to be realized.
The Company offsets, on a year on year basis, current tax assets and liabilities, where it has alegally enforceable right and where it intends to settle such assets and liabilities on a net basis.
o) Cash flow statement
Cash flows are reported using the indirect method, whereby net profit before tax is adjusted forthe effects of transactions of a non cash nature and any deferrals or accruals of past or futurecash receipts or payments. The cash flow from regular revenue generating, investing andfinancing activities of the Company is segregated.
p) Cash and cash equivalents
Cash and cash equivalent in cash flow statement comprises cash on hand and demand depositswith bank that are readily convertible into known amount of cash and which are subject to aninsignificant risk of changes in value.
q) Employee stock options
The Company accounts for stock based compensation based on the intrinsic value method.‘Option Discount’ has been amortised on a straight-line basis over the vesting period of theshares issued under Employee Stock Option Plans (‘ESOP’).
‘Option Discount’ means the excess of the market price/fair value of the underlying shares atthe date of grant of the options over the exercise price of the options.
r) Provision and Contingencies
A provision is recognised if, as a result of a past event, the Company has a present obligationthat can be estimated reliably, and it is probable that an outflow of economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. The provisions are measuredon an undiscounted basis.
Onerous contracts
A contract is considered as onerous when the expected economic benefits to be derived by theCompany from the contract are lower than the unavoidable cost of meeting its obligationsunder the contract. The provision for an onerous contract is measured at the lower of theexpected cost of terminating the contract and the expected net cost of continuing with thecontract. Before a provision is established, the Company recognises any impairment loss onthe assets associated with that contract.
Contingencies
Provision in respect of loss contingencies relating to claims, litigation, assessment, fines,penalties, etc. are recognised when it is probable that a liability has been incurred, and theamount can be estimated reliably.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Aurigene Discovery Technologies Limited 45
Notes to Financial Statements
Notes to financial statements
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2 : Share capital
Authorised95,000,000 (Previous year : 95,000,000)equity shares of ` 10 each 9,500 9,50045,000,000 (Previous year : 45,000,000)8% cumulative redeemable preference shares of ` 10 each 4,500 4,500
14,000 14,000
Issued, subscribed and fully paid up90,544,104 (Previous year :90,544,104)equity shares of ` 10 each, fully paid up - [Refer note 1] 9,054 9,05414,750,000 (Previous year : 14,750,000)8 % cumulative redeemable preference shares of 1,475 1,475` 10 each, fully paid up. - [Refer note 2]
10,529 10,529
Note 1
Of the above issued, subscribed and paid up equity shares 90,544,088 (Previous year : 90,544,088)equity shares of ` 10 each fully paid up are held by Dr. Reddy’s Laboratories Limited (DRL), theholding company and 16 (Previous year : 16) equity shares are held by the nominees of DRL. DRL isthe ultimate holding company.
Note 2
8% cumulative redeemable preference shares 14,750,000 (Previous year : 14,750,000) preferenceshares of Rs. 10 each fully paid up is entirely held by DRL, the ultimate holding company as of theseshares were allotted as fully paid-up pursuant to a Business Purchase Agreement without paymentsbeing received in cash. Further, these shares are redeemable in 5 years from the date of allotment atpar and contain put and call options. Both put and call options are exercisable after 18 months fromthe date of allotment and on expiry of every 6 months thereafter.
Aurigene Discovery Technologies Limited 46
a. Reconciliation of the number of shares outstanding at the beginning and at the end ofthe year
(Number of shares)
As at As at31 March 2013 31 March 2012
Equity sharesNumber of shares at the beginning of the year 90,544,104 90,544,104Number of shares issued during the year - -
Number of shares outstanding at the end of the year 90,544,104 90,544,104
Preference sharesNumber of shares at the beginning of the year 14,750,000 14,750,000Number of shares issued during the year - -
Number of shares outstanding at the end of the year 14,750,000 14,750,000
b. List of persons holding more than 5 percent shares in the Company :
As at 31 March 2013 As at 31 March 2012
Name of the share holder No. of % holding No. of % holdingshares held
Dr. Reddy’s Laboratories Limited 90,544,088 100% 90,544,088 100%(Holding company)
c. Aggregate number of shares issued for consideration other than cash during the periodof five years immediately preceding the reporting date:
(Number of shares)
As at As at As at As at As at31 March 2013 31 March 2012 31 March 2011 31 March 2010 31 March 2009
14,750,000(Previous year : 14,750,000)8 % cumulativeredeemable preferenceshares of Rs. 10 each,fully paid up 14,750,000 14,750,000 14,750,000 14,750,000 -
14,750,000 14,750,000 14,750,000 14,750,000 -
d. During the five year period ended on 31 March 2013 no shares have been bought back.
Notes to Financial Statements
Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Aurigene Discovery Technologies Limited 47
Notes to Financial Statements
Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
3. Reserves and surplus
(i) Capital reservesOpening balance 18 18Add: Additions during the year - -
Closing balance 18 18
(ii) Securities premium accountOpening balance 288 288Add: Additions during the year - -
Closing balance 288 288
(iii) Share options outstanding accountOpening balance - 77Less: Transfer to general reserve on account ofcancellation of outstanding ESOPs - Refer note 22(m) - 77
Closing balance - -
(iv) General ReserveOpening balance 321 -Add: Addition on account of cancellation of ESOPs - 77Add: Compulsory transfer on account ofproposed dividend - 244
Closing balance 321 321
(v) Surplus/ (deficit) in the statement of profit and lossOpening balance (708) (3,402)Add: profit for the year 3,720 3,259Less: AppropriationsProposed dividend (118) (276)Tax on dividend (20) (45)Transfer to general reserve - (244)
Net deficit in the statement of profit and loss 2,874 (708)
3,501 (81)
4 Other long-term liabilitiesIncome received in advance - 666
- 666
Aurigene Discovery Technologies Limited 48
As at As atParticulars 31 March 2013 31 March 2012
5 Long-term provisionsProvision for employee benefits* - 239
- 239*Refer Note 22(g)
6 Trade payablesTrade payables- Dues to micro and small enterprises* - -- Dues to other creditors 682 1,079
682 1,079* Refer note 22(o)
7 Other current liabilitiesIncome received in advance 373 322Other payables - statutory liabilities 77 70
450 392
8 Short-term provisionsProvision for employee benefits. 387 714Provision for taxation, net of advance tax 1,529 968Provision for preference dividend 118 276Provision for tax on preference dividend 20 45
2,054 2,003
Notes to Financial Statements
Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Aurigene D
iscovery Technologies Lim
ited49
9 : Fixed Assets (All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Gross Block Depreciation / Amortisation Net Block
Description As at Additions Deletions/ As at As at For the Deletions As at As at As at
01.04.2012 Transfers 31.03.2013 01.04.2012 year 31.03.2013 31.03.2013 31.03.2012
Tangible, owned
Land 497 33 - 530 - - - - 530 497
Buildings 2,749 37 - 2,786 709 92 - 801 1,985 2,040
Laboratory equipment 6,909 225 21 7,113 3,937 654 13 4,578 2,535 2,972
Electrical equipment 1,462 63 - 1,525 1,086 77 - 1,163 362 376
Plant and machinery - others 202 19 - 221 93 24 - 117 104 109
Computers 681 52 - 733 529 81 - 610 123 152
Furniture and fixtures 707 13 - 720 563 33 - 596 124 144
Vehicles 94 15 6 103 49 19 4 64 39 45
Office equipment 244 13 - 257 167 16 - 183 74 77
Total A 13,545 470 27 13,988 7,133 996 17 8,112 5,876 6,412
Intangible assetsTechnical know how 140 - - 140 85 47 - 132 8 55
Total B 140 - - 140 85 47 - 132 8 55
Capital work-in-progress 27 403 27 403 - - - - 403 27
Total C 27 403 27 403 - - - - 403 27
Total D (A + B + C) 13,712 873 54 14,531 7,218 1,043 17 8,244 6,287 6,494
Previous year 12,789 1,150 227 13,712 6,141 1,127 50 7,218 6,494
Note:- During the year the Company has executed sale deed with KIADB for the land and accordingly the land has been registered inthe name of the Company.
Notes to F
inancial Statem
ents
Notes to financial statements (Continued)
Aurigene Discovery Technologies Limited 50
Notes to Financial Statements
Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
10 Non-current investmentsTrade investments unquotedInvestment in equity instrument4,400,000 (Previous year : 4,400,000)common stock of USD 1 each, fully paid up, ofAurigene Discovery Technologies Inc.,U.S.A.,subsidiary Company 2,083 2,083
1,000,000 (Previous year : 1,000,000) Common stock ofMalaysian Ringgits 1 each, fully paid up,of Aurigene Discovery Technologies (Malaysia) Sdn Bhd,Malaysian, subsidiary company 156 156
Total 2,239 2,239Less : Provision for diminution in value of investments (2,083) (2,083)
Net Investments 156 156
Aggregate book value of unquoted investments 2,239 2,239Aggregate provision for diminution in value of investments (2,083) (2,083)
11 Long-term loans and advancesTo parties other than related partiesCapital advances(unsecured, considered good) 229 2Security deposits(Unsecured considered good ) 24 24Other loans and advancesUnsecured, considered goodAdvance income tax 106 106
359 132
12 InventoriesConsumables 60 54
60 54
13 Trade receivablesReceivables outstanding for a period exceedingsix month from the day they became due for paymentUnsecured, considered good 8 5Doubtful - -Less: Provision for doubtful receivable - -
8 5
Aurigene Discovery Technologies Limited 51
Notes to Financial Statements
Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
Other receivablesUnsecured considered good 1,977 2,520Doubtful - -Less: Provision for doubtful receivable - -
1,977 2,520
1,985 2,525
14 Cash and bank balancesCash on hand 1 1Balance with banks on current account 608 1,709 on deposit account (with original maturity of 3 months or less) 505 2,125
1,114 3,835Other bank balances(due to mature withing 12 month of the reporting date) 6,380 100
7,494 3,935
15 Short-term loans and advancesUnsecured, considered goodLoans and advances to related parties * 232 355Loans and advances to employees 23 13Other loans and advances 410 361
Unsecured, considered doubtfulLoans and advances to related parties ** 1,434 1,434Less: Provision for doubtful loans and advances *** (1,434) (1,434)
665 729
* Loans and advances to related parties considered goodAurigene Discovery Technologies, Malaysia 86 355Aurigene Discovery Technologies Inc- USA 146 -** Loans and advances to related parties considered doubtfulAurigene Discovery Technologies Inc- USA 1,434 1,434*** Refer note 22(n)
Other loans and advances include:Prepaid expenses 146 151Advances to suppliers 132 80VAT input credit 84 82
Aurigene Discovery Technologies Limited 52
Advance sales tax 11 11Security deposits 4 4Service tax input credit net 19 20Other receivables 14 13
410 361
16 Other current assetsUnbilled revenue 131 528Interest accrued on fixed deposits 13 20
144 548
For the year ended For the year endedParticulars 31 March 2013 31 March 2012
17 Revenue from operationsIncome from services 15,956 16,696
15,956 16,696
18 Other incomeInterest income 406 91Net gain on sale of fixed assets 2 4Other non-operating income 12 11
420 106
19 Employee benefits expenseSalaries and wages 3,906 4,052Contribution to provident and other funds- Provident fund 187 190- Superannuation scheme 7 9Staff welfare expenses 138 195
4,238 4,446
20 Finance costsInterest expense 127 87
127 87
Notes to Financial Statements
Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
Aurigene Discovery Technologies Limited 53
Notes to Financial Statements
Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
For the year ended For the year endedParticulars 31 March 2013 31 March 2012
21 Other expensesLaboratory consumables 2,855 3,200Power and fuel 504 443Rent 155 180Repairs and maintenanceBuildings 71 163Plant and machiney 263 348Others 263 268Traveling and conveyance 297 283Legal and professional charges 241 213Business development 155 113Communication 34 45Membership and subscription 63 53Rates and taxes 32 10Insurance 34 40Bank charges 19 21Handling charges 69 66Software expenses 124 118Recruitment charges 7 9Security charges 44 37Safety and environmental charges 54 58Printing and stationery 13 17Foreign exchange loss, (net) 47 597Miscellaneous expenses 1 1
5,345 6,283
Aurigene Discovery Technologies Limited 54
Notes to Financial Statements
Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
22. Notes to the financial statements
a) Commitments and contingent liabilities
(i) Estimated amount of contracts remaining to be executed on capital account andnot provided for as at 31 March 2013 was ̀ 311 lakhs (Previous year: ̀ 24 lakhs).
(ii) The Bangalore Unit of the Company is registered as a 100% export oriented unit(“EOU”), and is exempted from customs and central excise duties and levies onimported and indigenous capital goods and stores and spares. The Company hasexecuted legal undertakings to pay Customs duty, Central Excise duty, levies andliquidated damages payable, if any, in respect of imported and indigenous capitalgoods and stores and spares consumed duty free, in the event that certain termsand conditions are not fulfilled. As on 31 March 2013, the Company has a positiveNet Foreign Exchange Earning, as defined in the Foreign Trade Policy 2009-2014.
b) Details of imported and indigenous lab consumables and spare parts consumed
Particulars For the year ended For the year ended31 March 2013 31 March 2012
Value % of total Value % of totalconsumption consumption
Lab consumables(excluding job work)Imported 894 31% 981 31%Indigenous 1,961 69% 2,219 69%
Total 2,855 100% 3,200 100%
Spare parts (included in repairs and maintenance)
Imported 179 63% 21 13%Indigenous 107 37% 139 87%
Total 286 100% 160 100%
c) CIF value of imports
Particulars Year ended Year ended31 March 2013 31 March 2012
Laboratory consumables 894 981Capital goods 116 487Spare parts 179 21
Total 1,189 1,489
Aurigene Discovery Technologies Limited 55
Notes to Financial Statements
Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Particulars Year ended Year ended31 March 2013 31 March 2012
d) Expenditure in foreign currencyTravelling and conveyance 55 62Legal and professional charges 15 79Others 173 185
Total 243 326
e) Earnings in foreign currencyIncome from operations 14,970 15,643
f) Auditors’ remunerationStatutory audit 7 7Out of pocket expenses - -
Total 7 7* Excludes applicable service tax.
g) Disclosure in respect of employee benefits under Accounting Standard (AS) – 15 (Revised)“Employee Benefits” prescribed by the Companies (Accounting Standards) Rules, 2006.
Gratuity plan
The following table sets out the status of the gratuity plan as required under AccountingStandard (AS) 15 – “Employee benefits”.
Reconciliation of the defined benefit obligations
Change in defined benefit obligationOpening defined benefit obligation 278 252Current service cost 52 56Interest cost 26 24Actuarial losses / (gain) 48 (20)Benefits paid (24) (34)
Present value of defined benefit obligation 380 278Fair value of plan assets 365 -
Closing value of defined benefit obligation 15 278
Change in the fair value of assetsOpening fair value of plan assets - -Contributions by employer 380 -Benefits paid (24) -Expected return on plan assets 9 -
Closing fair value of plan assets 365 -
Aurigene Discovery Technologies Limited 56
Notes to Financial Statements
Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Particulars Year ended Year ended31 March 2013 31 March 2012
Gratuity cost for the yearCurrent service cost 52 56Interest on defined benefit obligation 26 24Net actuarial losses / (gains) recognized in year 48 (20)Expected return on plan assets (9) -
Total, included in “Salaries and wages” 117 60
Gratuity break-upNon current portion - 239Current portion 15 39
Total 15 278
Assumptions at the valuation dateDiscount rate 7.95% 8.6%Salary escalation rate 10% for first 2 years
and 9% thereafter 8%Average attrition rate 14.97% 14.89%
Salary escalation rate
The estimates of future salary increases, considered in actuarial valuation, take accountof inflation, seniority, promotion and other relevant factors such as supply and demandfactors in the employment market.
Discount rate
The discount rate is based on the prevailing market yields of Indian Government securitiesas at the Balance Sheet date for the estimated term of the obligations.
Average attrition rate
The attrition rate is computed on the average of current year and previous year attritionrate of employees resigning at various age groups.
Experience adjustments
Particulars Year ended31 March 31 March 31 March 31 March 31 March
2013 2012 2011 2010 2009
Defined benefit obligation 380 278 252 212 60Plan assets 365 - - - -Surplus / (deficit) (15) (278) (252) (212) (60)Experience adjustment on plan liabilities 5 (2) 2 18 3Experience adjustment on plan assets - - - - -
Aurigene Discovery Technologies Limited 57
Notes to Financial Statements
Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Long term incentives
Long term incentive is a rewarding plan for motivating employees who have been loyalto the Company and contributed to the growth of the Company. It is a defined benefitplan and is accrued based on actuarial valuation at each balance sheet date, carried outby an independent actuary. Given below are the key assumptions and the actuarialliability accounted in the books:
Particulars Year ended Year ended31 March 2013 31 March 2012
Discount rate % 7.95% p.a. 8.6% p.a.Increase in incentive amount % 0.00% 0.00%Long term incentive liability ` in lakhs - 209Non current portion ` in lakhs - -Current portion ` in lakhs - 209
h) Operating leases
The Company has certain premises under cancelable operating lease agreements. Thetotal rental expense under cancelable operating leases is ` 155 Lakhs (Previous year:` 180 Lakhs).
i) Deferred taxes
Components of deferred tax assets and liabilities and are:
As at As atParticulars 31 March 2013 31 March 2012
Deferred tax assetProvision for gratuity - 91Provision for long term incentives - 68Fixed assets 64 63Others 2 32
Deferred tax asset/ (liability), net 66 254
Aurigene Discovery Technologies Limited 58
j) Earnings per share (EPS)
Year ended Year endedParticulars 31 March 2013 31 March 2012
Calculation of weighted average number ofequity shares of `̀̀̀̀ 10 eachNumber of shares at the beginning of the year 90,544,104 90,544,104Total number of equity sharesoutstanding at the end of the year 90,544,104 90,544,104Weighted average number of equity sharesoutstanding during the year – Basic 90,544,104 90,544,104Net profit after tax 3,721 3,259Less: Preference dividend(including dividend distribution tax thereon) 138 137Net profit after tax attributable to equity share holders 3,583 3,122Basic earnings per share (`) 3.96 3.45Number of potentially dilutive shares under options - -Weighted average number of equity sharesoutstanding during the year – Diluted 90,544,104 90,544,104Diluted earnings per share (`) 3.96 3.45
k) Segment reporting
The Company undertakes research relating to drug discovery for its customers primarilybased outside India. The entire business is reviewed by management as one since ithas only one business and customers across the world do not have differing risks andrewards. All of its assets, except for receivables are in India (including all fixed assets).Accordingly, the Company has only one reportable business and geographical segment.Hence, in accordance with Para 25 of Accounting Standard 17: Segment Reporting theCompany has not made any separate segmental disclosures.
l) Related party disclosures
i. Parties where control exists;l Aurigene Discovery Technologies Inc., U.S.A - subsidiary companyl Aurigene Discovery Technnologies (M) Sdn Bhd, Malaysia - subsidiary
companyl Dr. Reddy’s Laboratories Ltd., Hyderabad -ultimate holding company
ii. Other related parties with whom transactions have taken place during the year:l CJK Biomedical LLCl Konticon APS, an entity in which a director is interested
Notes to Financial Statements
Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Aurigene Discovery Technologies Limited 59
iii. Particulars of related party transactions
The following is a summary of significant related party transactions:
Particulars Year ended Year ended31 March 2013 31 March 2012
Repayment of loanDr. Reddy Laboratories Limited –Ultimate Holding Company - 89
Advances toAurigene Discovery Technologies (M) Sdn Bhd,Malaysia – Subsidiary Company - 36Aurigene Discovery Technologies Inc., U.S.A -subsidiary company 146 -
Advances repayment byAurigene Discovery Technologies (M) Sdn Bhd,Malaysia – Subsidiary Company 269 238
Revenue from operationsDr. Reddy Laboratories Limited –Ultimate Holding Company 978 1,020Aurigene Discovery Technologies (M) Sdn Bhd,Malaysia – Subsidiary Company 2,808 1150
Fixed assets purchasedDr. Reddy Laboratories Limited –Ultimate Holding Company - 30
Fixed assets soldDr. Reddy Laboratories Limited –Ultimate Holding Company 9 48
Lab consumablesDr. Reddy Laboratories Limited –Ultimate Holding Company 1 71
Power and fuelDr. Reddy Laboratories Limited –Ultimate Holding Company 281 224
Lease rent paidDr. Reddy Laboratories Limited –Ultimate Holding Company 150 167
Repairs and maintenanceDr. Reddy Laboratories Limited –Ultimate Holding Company 41 36
Membership and subscriptionDr. Reddy Laboratories Limited –Ultimate Holding Company 35 42
Notes to Financial Statements
Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Aurigene Discovery Technologies Limited 60
Particulars Year ended Year ended31 March 2013 31 March 2012
Other expensesDr. Reddy Laboratories Limited –Ultimate Holding Company 10 30Expenses re-chargedDr. Reddy Laboratories Limited –Ultimate Holding Company 11 30Business promotion expenseCreative Business Sarl - 35CJK Biomedical LLC 36 -Professional feeKonticon APS 6 39Remuneration to key management personnelMr. C S N Murthy, Whole time Director* - 8
* Till 02 May 2011.
iv. The following amounts are due from/to related parties:
Due to related parties (included in current liabilities)
Dr. Reddy Laboratories Limited –Ultimate Holding Company 67 410Due from related parties (included in trade receivables)
Dr. Reddy Laboratories Limited –Ultimate Holding Company 194 63Aurigene Discovery Technologies (M)Sdn Bhd, Malaysia – Subsidiary Company 890 260Due from related parties (included in loans and advances)
Aurigene Discovery Technologies Inc., U.S.A –Subsidiary Company, [ refer note (n) below] 1,580 1,434Aurigene Discovery Technologies (M)Sdn Bhd, Malaysia – Subsidiary Company 86 355Dr. Reddy Laboratories Limited –Ultimate Holding Company 12 58InvestmentsAurigene Discovery Technologies Inc., U.S.A. –Subsidiary Company 2,083 2,083Aurigene Discovery Technologies (M)Sdn Bhd, Malaysia – Subsidiary Company 156 156Provision for doubtful advancesAurigene Discovery Technologies Inc., U.S.A. –Subsidiary Company, [ Refer note (n) below] 1,434 1,434Provision for permanent diminutionin value of investmentAurigene Discovery Technologies Inc., U.S.A. –Subsidiary Company 2,083 2,083
Notes to Financial Statements
Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Aurigene Discovery Technologies Limited 61
m) Employee stock option plan (ESOP)
ESOP 2003 (hereinafter referred to as “the plan”)
The ESOP scheme of the Company was approved by the shareholders at the Extra-ordinary general meeting held on 30 January 2003 and originally the scheme was intendedto remain in force till 31 July 2012. However, during the year ending 31 March 2012, dueto liquidity issues, the employees of the Company surrendered their stock options underthe above scheme. These options were granted on various dates between 1 April 2004to 2 January 2008 and subsequently vested between 31 March 2007 to 31 January2011.
During the year ended 31 March 2012, the Company cancelled 1,009,090 stock optionswhich were fully vested and outstanding under the plan, upon surrender by the employees.Accordingly, no stock options were outstanding under the plan as at 31 March 2013.
For the For theyear ended year ended
31 March 2013 31 March 2012
Stock options at the beginning - 1,009,090Forfeited due to resignation of employees - -Cancelled during the year - 1,009,090Stock options outstanding at the end - -Exercisable at the end of the year - -
n) Amounts invested in /Recoverable from Aurigene Discovery Technologies Inc.U.S.A.
The Company has a wholly owned subsidiary - Aurigene Discovery Technologies Inc. inUSA. Considering the financial position and recurring losses incurred by the subsidiary,the Company has assessed its investment in subsidiary for other than temporarydiminution in the value. Accordingly, the Company had provided for its entire investmentin its subsidiary towards diminution, being other than temporary.
The Company has advanced money in the form of share application money amountingto USD 0.67 million (equivalent to ` 311 lakhs) to Aurigene Discovery Technologies Incagainst which no shares have been allotted till date. Considering the financial position ofthe subsidiary and based on the evaluation of the recoverability of such advance, theCompany has provided for ` 311 lakhs of share application money.
In 2004, Dr. Reddy’s Laboratories Limited (DRL), the ultimate holding company hadadvanced, on behalf of the Company, an amount of USD 2.5 million (equivalent to` 1,123 lakhs) to Aurigene Discovery Technologies Inc., the wholly owned subsidiary ofthe Company. Based on the evaluation of recoverability of the advance, the Companyhad provided for the entire amount of advances.
The Company is in the process of also reviving the operations of Aurigene DiscoveryTechnologies Inc and has remitted USD 275,000 (equivalent to ` 146 lakhs) during theyear to meet the operating expenses which is based on its operating plan, it believes isrecoverable in future year.
Notes to Financial Statements
Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Aurigene Discovery Technologies Limited 62
o) Micro, Small and Medium Enterprises
The management has a process of identifying enterprises which have provided goodsand services to the Company and which qualify under the definition of micro and smallenterprises, as defined under Micro, Small and Medium Enterprises Development Act,2006. Further, The Ministry of Micro, Small and Medium Enterprises has issued an OfficeMemorandum dated 26 August 2008 which recommends that the Micro and SmallEnterprises should mention in their correspondence with its customers the EntrepreneursMemorandum Number as allotted after filing of the Memorandum. Accordingly, thedisclosure in respect of the amounts payable to such enterprises as at 31 March 2013has been made in the financial statements based on information received and availablewith the Company. Further in the view of the management, the impact of interest, if any,that may be payable in accordance with the provisions of the said Act is not expected tobe material. The Company has not received any claim for interest from any supplierunder the said Act.
For the For theParticulars year ended year ended
31 March 2013 31 March 2012
The principal amount and the interest due thereonremaining unpaid to any supplier as at the end ofeach accounting year; Nil Nil
The amount of interest paid by the Companyalong with the amounts of the payment made tothe supplier beyond the appointed day during the year; Nil Nil
The amount of interest due and payable forthe period of delay in making payment(which have been paid but beyond the appointedday during the year) but without adding the interestspecified under this Act; Nil Nil
The amount of interest accrued and remainingunpaid at the end of the year; Nil Nil
The amount of further interest remaining due andpayable even in the succeeding years, until such datewhen the interest dues as above are actually paidto the small enterprise. Nil Nil
p) Derivatives
The Company has taken hedging instruments to hedge the foreign currency exposureon account of receivables denominated in USD. The open forward covers as of 31 March2013 is USD Nil (previous year: 10,050,000).
The table below summarizes the periods when the forecasted cash flows associatedwith hedging Instruments are expected to occur:
Notes to Financial Statements
Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Aurigene Discovery Technologies Limited 63
In US Dollars As at As at31 March 2013 31 March 2012
Not later than one month - 1,000,000Later than one month and not later than three months - 2,750,000Later than three months and not later than six months - 3,300,000Later than six months and not later than one year - 3,000,000
Total - 10,050,000
q) Un-hedged significant foreign currency exposure
The year-end significant foreign currency exposures that have not been hedged by aderivative instrument or otherwise are given below:
Particulars Currency Year ended Year ended Year ended Year ended
31 March 2013 31 March 2013 31 March 2012 31 March 2012
Foreign currency `̀̀̀̀ In lakhs Foreign currency `̀̀̀̀ In lakhs
Trade receivable USD 3,194,009 1,786 4,794,073 2,439
Euro 75,705 34,526
Advance from customers USD 785,212 373 1,940,620 988
Advances to suppliers/ USD 158,106 85 13,841 8capital advances
Trade payable USD 125,319 123 97,540 99
GBP 33,070 2,390
CAD - 2,966
Euro 43,237 67,647
r) The Company has developed a comprehensive system of maintenance of informationand documents as required by the transfer pricing legislation under sections 92-92F ofthe Income Tax Act, 1961, which require existence of these records. The Managementis of the opinion that its international transactions are at arm’s length so that the aforesaidlegislation will not have any impact on the financial statements, particularly on the amountof tax expense and that of provision for taxation.
As per our report of even date attachedfor B.S.R & Co. for and on behalf of the Board of DirectorsChartered AccountantsFirm registration no. 101248W G V Prasad Satish Reddy
Director DirectorZubin ShekaryPartnerMembership No. 048814 Ashish Lath
Director - Finance & ManagerPlace : BangaloreDate : 26 April 2013
Notes to Financial Statements
Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Aurigene D
iscovery Technologies Lim
ited64
Statement pursuant to Section 212 of the Companies Act, 1956
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Changes in theinterest ofAurigeneDiscovery
TechnologiesLtd., betweenthe end of thelast financialyear and 31March 2013
Nil
Nil
Materialchanges
between theend of the
last financialyear and31 March
2013
Nil
Nil
Name of the Subsidiary
Aurigene DiscoveryTechnologies Inc.
Aurigene DiscoveryTechnologies (Malaysia)Sdn Bhd
The FinancialYear of thesubsidiarycompanyended on
31.03.2013
31.03.2013
Equity Shares
4,400,000
100,000
PreferenceShares
-
-
EquityHolding %
100
100
a) Dealt within theaccount ofA u r i g e n eD i s c o v e r yTechnologiesLtd. for theyear ended31.03.2013
Nil
Nil
b) Not dealtwith in theaccount ofA u r i g e n eD i s c o v e r yTechnologiesLtd. for theyear ended31.03.2013
(9,634)
15,779
a) Dealt within the accountof AurigeneD i s c o v e r yTechnologiesLtd. for theyear ended31.03.2012
Nil
Nil
b) Not dealtwith in theaccount ofA u r i g e n eD i s c o v e r yTechnologiesLtd. for theyear ended31.03.2012
(278,020)
(27,941)
The net Aggregate of profits(losses) of the subsidiarycompany for it’s previousfinancial years so far as theyconcern the members ofAurigene DiscoveryTechnologies Ltd.
The net Aggregate of profits(losses) of the subsidiarycompany for it’s financialyear so far as they concernthe members of Aurigene
Discovery Technologies Ltd.
Number of shares in the subsidiary company held byAurigene Discovery Technologies Ltd. at the above date
PreferenceHolding %
-
-
beta Institut gemeinnützige GmbH 65
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012
Loss for the period after taxation (932) (1)Balance brought forward - 1Balance carried forward to Balance Sheet (932) -
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of this Act for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place: Hyderabad Michael EwersDate: 10 May 2013 Director
DIRECTORS’ REPORT
beta Institut gemeinnützige GmbH 66
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of beta Institut gemeinnützige GmbH , acompany incorporated and administered outside India, which comprise the Balance Sheet as at 31March 2013, and the Statement of Profit and Loss for the year ended, and a summary of significantaccounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicable andrelevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carried outfor the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by management, as well as evaluating the overall presentation of thefinancial statements. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013; and
(b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
beta Institut gemeinnützige GmbH 67
b. in our opinion proper books of account as required by law have been kept by the Company so faras appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreement withthe books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to the extentapplicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
beta Institut gemeinnützige GmbH 68
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 5,401 5,401Reserves and surplus 2.2 623 1,386
6,024 6,787Non current liabilitiesOther long term liabilities 2.3 8,687 -
8,687 -Current liabilitiesTrade payables 2.4 192 1,549Other current liabilities 2.3 639 2,359
831 3,908
TOTAL 15,542 10,695ASSETSNon current assetsFixed assets Tangible assets 2.5 297 1,196 Intangible assets 2.5 - 1,085Long term loans and advances 2.6 - 1,349
297 3,630Current assetsTrade receivables 2.7 - 78Cash and bank balances 2.8 15,175 6,987Short term loans and advances 2.9 14 -Other current assets 2.10 56 -
15,245 7,065
TOTAL 15,542 10,695
Significant accounting policies 1
Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Michael EwersPartner DirectorMembership No. 9750Place : HyderabadDate : 10 May 2013
Balance Sheet
beta Institut gemeinnützige GmbH 69
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeOther operating revenues 19,610 34,423
Revenue from operations 19,610 34,423Other income 2.11 72 66
Total revenue 19,682 34,489
ExpensesEmployee benefits expense 2.12 10,553 17,274Finance costs 2.13 - 88Depreciation and amortization expense 2.5 1,160 1,874Other expenses 2.14 8,901 15,254
Total expenses 20,614 34,490
Profit / (Loss) before tax (932) (1)Tax expense 2.16 Current tax - - Deferred tax - -
Profit / (Loss) for the year (932) (1)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Michael EwersPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
beta Institut gemeinnützige GmbH 70
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) of CompaniesAct, 1956, other pronouncements of Institute of Chartered Accountants of India and provisions ofCompanies Act, 1956.
The financial statements have been prepared based on books, records and other returns maintainedby the subsidiary. The financial statements have been presented in Indian Rupees, for thelimited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation of usefullife of tangible and intangible assets, assessment of recoverable amounts of deferred tax assets,provision for obligations relating to employees, provisions against litigations and impairment ofassets. Actual results could differ from these estimates. Estimates and underlying assumptionsare reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectivelyin the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability for atleast 12 months after the reporting date. Terms of a liability that could, at the option of thecounterparty, result in its settlement by the issue of equity instruments do not affect itsclassification.
Notes to Financial Statements
beta Institut gemeinnützige GmbH 71
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intended use,as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ̀ 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of fixed assets are givenbelow:
YearsFurniture, fixtures and office equipment (other than computer equipment) 3 to 5Computer equipment 3
e) Intangible assets and amortisation
Intangible assets are recorded at the consideration paid for acquisition including any importduties and other taxes (other than those subsequently recoverable by the enterprise from thetaxing authorities), and any directly attributable expenditure on making the asset ready for itsintended use.
Intangible assets are amortised on a systematic basis over the best estimate of their usefullives, commencing from the date the asset is available to the Company for its use.
The management’s estimates of the useful lives for various categories of intangible assets areas follows:
YearsIntangibles 6 to 10
f) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultant
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Notes to Financial Statements
beta Institut gemeinnützige GmbH 72
exchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
g) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of past eventsand it is probable that an outflow of resources embodying economic benefits will be required tosettle the obligation. Provisions are recognised at the best estimate of the expenditure requiredto settle the present obligation at the balance sheet date. Provisions are measured on anundiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certain thatan inflow of economic benefits will arise, the asset and related income are recognised in theperiod in which the change occurs.
h) Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on the timeproportionate method.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Notes to Financial Statements
beta Institut gemeinnützige GmbH 73
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorisedEuro 100,000 (previous year 100,000)* 5,401 5,401
IssuedEuro 100,000 (previous year 100,000)* 5,401 5,401
Subscribed and paid-upEuro 100,000 (previous year 100,000)* 5,401 5,401
5,401 5,401
* No concept of nature and number of shares in this company
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year 1,386 937Additions / (deductions) during the year 169 449
1,555 1,386DeficitBalance at the beginning of the year - 1Add: Current year loss (932) (1)Balance carried forward (932) -
623 1,386
2.3 : Other liabilitiesa) Other long term liabilitiesDeferred revenue - non current 8,687 -
8,687 -b) Other current liabilitiesOther current liabilities 639 2,359
639 2,359
2.4 : Trade PayablesPayables to others 192 1,549
192 1,549
Notes to Financial Statements
Note 2 : Notes to Financial Statements
beta Institut gemeinnützige G
mbH
74
Notes to F
inancial Statem
ents2.5 : Fixed assets (All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Gross Block Depreciation / Amortisation Net Block
Description As at Additions Deletions Forex As at As at For the Year Deletions Forex As at As at As at
01.04.2012 31.03.2013 01.04.2012 31.03.2013 31.03.2013 31.03.2012
Furniture and Fixtures 9,369 - 457 416 9,328 8,577 105 37 386 9,031 297 792
Computers 9,414 - 395 288 9,307 9,010 111 55 241 9,307 - 404
Total Tangible Assets (A) 18,783 - 852 704 18,635 17,587 216 92 627 18,338 297 1,196
Patents and Trademarks 5,469 - 195 258 5,532 4,384 944 38 242 5,532 - 1,085
Total Intangible Assets (B) 5,469 - 195 258 5,532 4,384 944 38 242 5,532 - 1,085
TOTAL (A+B) 24,252 - 1,047 962 24,167 21,971 1,160 130 869 23,870 297 2,281
Previous year 27,910 - 4,858 1,200 24,252 23,208 1,874 3,548 437 21,971 2,281
Note 2 : Notes to financial statements (Continued)
beta Institut gemeinnützige GmbH 75
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.6 : Long term loans and advances(Unsecured)Considered goodSecurity Deposits - 1,349
- 1,349
2.7 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months - -Other debts Considered good - 78
- 78Less: Provision for doubtful debts - -
- 78
2.8 : Cash and bank balancesCash on hand - -Bank balances In current accounts 15,175 6,987
15,175 6,987
2.9 : Short term loans and advances(Unsecured)Considered goodAdvances to material suppliers 14 -
14 -
2.10 : Other current assetsConsidered goodOther current assets 56 -
56 -
beta Institut gemeinnützige GmbH 76
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the year ended For the year endedParticulars 31 March 2013 31 March 2012
2.11 : Other incomeInterest income 72 66
72 66
2.12 : Employee benefits expenseSalaries, wages and bonus 8,792 13,702Contribution to provident and other funds 1,697 3,149Staff welfare expenses 64 423
10,553 17,274
2.13 : Finance costsInterest Expenses - 88
- 88
2.14 : Other expenseLegal and professional 403 3,188Rates and taxes 56 217Other selling expenses 8 236Travelling and conveyance - 68Communication 341 457Rent - 26Printing and stationery 27 86Bank charges 120 16Loss on sale of fixed assets, net 894 125Advertisements - 449Miscellaneous 7,052 10,386
8,901 15,254
beta Institut gemeinnützige GmbH 77
2.15: Commitments and contingent liabilities
There were no commitments and contingent liabilities as at 31 March 2013 (previous year: Nil).
2.16: Tax expense for the company is computed and presented together with the parent company's(Reddy Holding GmbH) financial as per the tax laws of Germany.
2.17: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.18: The Company, incorporated in Germany, is a 100% subsidiary of Reddy Holding GmbH.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Michael EwersPartner DirectorMembership No. 9750Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
betapharm Arzneimittel GmbH 78
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Lakhs)
Particulars 31 March 2013 31 March 2012
Loss for the period after taxation (11,235) (20,382)Balance brought forward (21,595) (1,213)Balance carried forward to Balance Sheet (32,830) (21,595)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place : Hyderabad Michael Ewers Abhijit MukherjeeDate : 10 May 2013 Director Director
DIRECTORS’ REPORT
betapharm Arzneimittel GmbH 79
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of betapharm Arzneimittel GmbH , acompany incorporated and administered outside India, which comprise the Balance Sheet as at 31March 2013, and the Statement of Profit and Loss for the year ended, and a summary of significantaccounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
betapharm Arzneimittel GmbH 80
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
betapharm Arzneimittel GmbH 81
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars Note31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 598 598Reserves and surplus 2.2 9,769 (16,219)
10,367 (15,621)Non current liabilitiesLong term borrowings 2.3 13,520 2,597
13,520 2,597Current liabilitiesTrade payables 2.4 23,100 11,338Other current liabilities 2.5 31,433 45,288Short term provisions 2.6 935 1,238
55,468 57,864
TOTAL 79,355 44,840ASSETSNon current assetsFixed assets Tangible assets 2.7 2,804 2,908 Intangible assets 2.7 1,434 5,885 Capital work-in-progress 79 -Long term loans and advances 2.8 39,464 1,246
43,781 10,039Current assetsInventories 2.9 8,338 12,031Trade receivables 2.10 9,834 6,827Cash and bank balances 2.11 11,301 15,389Short term loans and advances 2.12 1,638 194Other current assets 2.13 4,463 360
35,574 34,801
TOTAL 79,355 44,840Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Michael Ewers Abhijit MukherjeePartner Director DirectorMembership No. 9750Place : HyderabadDate : 10 May 2013
Balance Sheet
betapharm Arzneimittel GmbH 82
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeSales, net 54,342 51,849License fees 2,521 -Other operating revenues - 1,955
Revenue from operations 56,863 53,804Other income 2.14 7 2,165
Total revenue 56,870 55,969
ExpensesPurchase of stock-in-trade (traded goods) 38,073 44,165Conversion charges 279 342Employee benefits expense 2.15 5,924 5,486Finance costs 2.16 1,175 376Depreciation and amortization expense 2.7 4,957 2,956Other expenses 2.17 17,168 10,142Impairment of intangibles 2.7 - 12,884
Total expenses 67,576 76,351
Profit before tax (10,706) (20,382)Tax expense 2.20 Current tax (2) - Deferred tax 531 -
Profit for the year (11,235) (20,382)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Michael Ewers Abhijit MukherjeePartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
betapharm Arzneimittel GmbH 83
Note 1: Significant accounting policies(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act 1956, other pronouncements of Institute of Chartered Accountants of India andprovisions of Companies Act 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
betapharm Arzneimittel GmbH 84
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of fixed assets includes taxes, duties, freight and other incidental expenses related to theacquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intendeduse, as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of fixed assets are givenbelow:
YearsBuildings Factory and administrative buildings 20 to 50 Ancillary structures 3 to 15Plant and machinery 3 to 15Laboratory equipment 4 to 10Furniture, fixtures and office equipment (other than computer equipment) 3 to 5Computer equipment 3
Tenants improvements is being amortised over the primary period of the lease.
e) Intangible assets and amortisation
Intangible assets are recorded at the consideration paid for acquisition including any importduties and other taxes (other than those subsequently recoverable by the enterprise from thetaxing authorities), and any directly attributable expenditure on making the asset ready for itsintended use.
Intangible assets are amortised on a systematic basis over the best estimate of their usefullives, commencing from the date the asset is available to the Company for its use.
The management’s estimates of the useful lives for various categories of intangible assets areas follows:
Years
Patents, trademarks, etc. (including marketing/ distribution rights) 3 to 16
Notes to Financial Statements
Note 1: Significant Accounting Policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
betapharm Arzneimittel GmbH 85
f) Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value (NRV)is the estimated selling price in the ordinary course of the business, less the estimated costs ofcompletion and the estimated costs necessary to make the sale. Cost of inventories comprisesall cost of purchase, cost of conversion and other costs incurred in bringing the inventories totheir present location and condition.
The cost of all categories of inventory is determined using weighted average cost method.
g) Retirement benefits
Contributions payable to employee pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
h) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
i) Revenue recognition
Sale of goods
Revenue is recognized when the significant risks and rewards of ownership have been transferredto the buyer, recovery of the consideration is probable, the associated costs and possiblereturn of goods can be estimated reliably, there is no continuing management involvement withthe goods and the amount of revenue can be measured reliably. Revenue from the sale ofgoods is measured at the fair value of the consideration received or receivable, net of returns,sales tax and applicable trade discounts and allowances. Revenue includes shipping andhandling costs billed to the customer.
Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
j) Leases
The lease arrangement is classified as either a finance lease or an operating lease, at theinception of the lease, based on the substance of the lease arrangement.
Finance leases
A finance lease is a lease that transfers substantially all the risks and rewards incident toownership of an asset. A finance lease is recognized as an asset and a liability at thecommencement of the lease, at the lower of the fair value of the asset and the present value ofthe minimum lease payments. Initial direct costs, if any, are also capitalized and, subsequent toinitial recognition, the asset is accounted for in accordance with the accounting policy applicable
Notes to Financial Statements
Note 1: Significant Accounting Policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
betapharm Arzneimittel GmbH 86
to that asset. Minimum lease payments made under finance leases are apportioned betweenthe finance expense and the reduction of the outstanding liability. The finance expense isallocated to each period during the lease term so as to produce a constant periodic rate ofinterest on the remaining balance of the liability.
Operating leases
Other leases are operating leases, and the leased assets are not recognized on the Company’sbalance sheet. Payments made under operating leases are recognized in the statement ofprofit and loss on a straight-line basis over the term of the lease.
k) Income-tax expense
Income tax expense comprises current tax and deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and thecorresponding deferred tax liabilities or assets are recognised using the tax rates that havebeen enacted or substantially enacted by the balance sheet date. Deferred tax assets arerecognised only to the extent there is reasonable certainty that the assets can be realised infuture; however, where there is unabsorbed depreciation or carry forward of losses, deferredtax assets are recognised only if there is a virtual certainty of realisations of such assets.Deferred tax assets are reviewed as at each balance sheet date and written-down or written-upto reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.
Deferred tax assets and liabilities are offset where the Company has a legally enforceable rightto set-off assets against liabilities representing current tax, and where such assets and liabilitiesrelate to taxes on income levied by the same governing taxation laws.
l) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
Onerous contracts
A contract is considered as onerous when the expected economic benefits to be derived by theCompany from the contract are lower than the unavoidable cost of meeting its obligationsunder the contract. The provision for an onerous contract is measured at the lower of theexpected cost of terminating the contract and the expected net cost of continuing with thecontract. Before a provision is established, the Company recognises any impairment loss onthe assets associated with that contract.
Notes to Financial Statements
Note 1: Significant Accounting Policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
betapharm Arzneimittel GmbH 87
Contingencies
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Notes to Financial Statements
Note 1: Significant Accounting Policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
betapharm Arzneimittel GmbH 88
Notes to Financial Statements
Note 2 : Notes to financial statements
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorisedEuro 1,022,584 (previous year 1,022,584)* 598 598
IssuedEuro 1,022,584 (previous year 1,022,584)* 598 598
Subscribed and paid-upEuro 1,022,584 (previous year 1,022,584)* 598 598
598 552* No concept of nature and number of shares in this company
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year (68,480) (44,407)Additions / (deductions) during the year 37,223 (24,073)
(31,257) (68,480)Securities premium reserveBalance at the beginning of the year 73,856 73,856Additions / (deductions) during the year - -
73,856 73,856DeficitBalance at the beginning of the year (21,595) (1,213)Add: Current year loss (11,235) (20,382)
Balance carried forward (32,830) (21,595)
9,769 (16,219)
betapharm Arzneimittel GmbH 89
2.3 : Long term borrowingsLong term maturities of finance lease obligations 2,616 2,597Borrowings from holding company and other group companies 10,904 -
13,520 2,597
2.4 : Trade PayablesPayables to holding company and other group companies 10,050 5,684Payables to others 13,050 5,654
23,100 11,338
2.5 : Other current liabilitiesCurrent maturities of finance lease obligations 6 -Due to holding company and other group companies 1,257 -Accrued expenses 30,170 45,288
31,433 45,288
2.6 : Short term provisionsAllowance for sales returns 935 1,238
935 1,238
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
betapharm A
rzneimittel G
mbH
90
Notes to F
inancial Statem
ents
Note 2 : Notes to financial statements (Continued)
2.7 : Fixed assets (All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Gross Block Depreciation / Amortisation / Impairment Net Block
Description As at Addi- Dele- Forex As at As at For the Impair- Deletions Forex As at As at As at
01.04.2012 tions tions 31.03.2013 01.04.12 year ment 31.03.2013 31.03.2013 31.03.2012
Land 940 - - 23 963 - - - - - - 963 940
Buildings 2,599 - - 151 2,750 971 112 - - 110 1,193 1,556 1,628
Plant & Machinery 479 23 - 59 561 459 54 - - 20 533 28 20
Furniture, Fixtures 725 - - 48 773 505 58 - - 31 594 179 220
Computers 637 106 167 43 619 537 62 - 92 33 540 78 100
Vehicles 4 - - - 4 4 - - - - 4 - -
Total Tangible 5,384 129 167 324 5,670 2,476 286 - 92 195 2,864 2,804 2,908
Assets (A)
Patents, Trademarks 95,615 230 - 2,522 98,137 89,730 4,671 - - 2,302 96,703 1,434 5,885
Total Intangible 95,615 230 - 2,522 98,137 89,730 4,671 - - 2,302 96,703 1,434 5,885
Assets (B)
TOTAL (A+B) 101,000 359 167 2,846 103,807 92,206 4,957 - 92 2,497 99,567 4,238 8,793
Previous year 94,352 334 377 6,691 101,000 69,996 2,956 12,884 193 6,563 92,206 8,793
betapharm Arzneimittel GmbH 91
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.8 : Long term loans and advances(Unsecured)Considered goodLoan to holding company and other group companies 39,283 -Security Deposits 181 1,246
39,464 1,246
2.9 : Inventories(Valued on weighted average basis)Raw materials 6 30Work-in-progress 131 11Stock-in-trade (in respect of goods acquired for trading) 8,201 11,989Packing materials - 1
8,338 12,031
2.10 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months Considered good - - Considered doubtful 43 2Other debts Considered good 8,121 6,827Receivables from holding company and other group companies 1,713 -
9,877 6,829Less: Provision for doubtful debts (43) (2)
9,834 6,827
2.11 : Cash and bank balancesCash on hand - -Bank balances In current accounts 11,301 15,389
11,301 15,389
betapharm Arzneimittel GmbH 92
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.12 : Short term loans and advances(Unsecured)Considered goodStaff loans and advances 1 -Prepaid expenses 1,637 194
1,638 194
2.13 : Other current assetsConsidered goodOther receivables from holding companyand other group companies 2,188 -Other current assets 2,275 360
4,463 360
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.14 : Other incomeInterest income 7 2,165
7 2,165
2.15 : Employee benefits expenseSalaries, wages and bonus 5,524 4,885Contribution to provident and other funds 400 404Staff welfare expenses - 197
5,924 5,486
2.16 : Finance costsInterest Expenses 1,175 376
1,175 376
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
betapharm Arzneimittel GmbH 93
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.17 : Other expenseConsumption of Stores and spare parts - 25Legal and professional 198 482Carriage outward 1,351 1,452Rates and taxes 1,020 1,465Other selling expenses 533 604Travelling and conveyance 52 52Communication 32 35Rent 5 241Insurance 209 218Foreign exchange loss, net - 5Provision - Advances & Debtors 35 -Printing and stationery 10 11Bank charges 14 16Loss on sale of fixed assets, net 254 105Auditors' remuneration Audit fees 25 106Advertisements 1,189 1,254Miscellaneous 12,241 4,071
17,168 10,142
betapharm Arzneimittel GmbH 94
2.18: The company has taken buildings under finance lease. Future minimum lease paymentsunder finance leases as at 31 March 2013 are as follows:
Present value of Future MinimumParticulars minimum lease interest lease
Payments payments
Not later than 1 year 89 1 90Later than 1 year and not later than 5 years 443 2 445Beyond 5 years 2,086 11 2,097
Total 2,618 14 2,631
The company has taken buildings under finance lease. Future minimum lease paymentsunder finance leases as at 31 March 2012 are as follows:
Present value of Future MinimumParticulars minimum lease interest lease
Payments payments
Not later than 1 year 90 - 90Later than 1 year and not later than 5 years 550 3 553Beyond 5 years 1,962 11 1,972
Total 2,602 14 2,615
2.19: Related party disclosures
The Company has following amounts due from / to related parties:
Particulars As at As at31 March 2013 31 March 2012
i. Due to related parties (included inTrade payables and other current liabilities):Dr. Reddy’s Laboratories Limited 11,307 5,684
ii. Due from related parties (included inTrade receivables and other current assets):Dr. Reddy’s Laboratories Inc. 1,713 -Dr. Reddy’s Laboratories Limited 103 -
iii. Due from related parties(included in long term loans and advances):Reddy Holding GmbH 39,283 -
iv. Due to related parties (included in long term borrowings):Reddy Holding GmbH 10,904 -
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
betapharm Arzneimittel GmbH 95
2.20: Tax expense for the Company is computed and presented together with the parent Company's(Reddy Holding GmbH) financial as per the tax laws of Germany.
2.21: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.22: The Company, incorporated in Germany, is a 100% Subsidiary of Reddy Holding GmbH.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Michael Ewers Abhijit MukherjeePartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Cheminor Investments Limited 96
Dear Members,
Your Directors present the 23rd Annual Report of the Company for the year ended 31 March 2013
Financial Highlights(` in thousands)
Particulars 31 March 2013 31 March 2012Loss for the period (18) (11)Balance Brought forward (137) (126)Balance Carried forward to Balance Sheet (155) (137)
Operations
The Company did not have any operation during the year.
Dividend
Your Directors do not recommend any dividend for the financial year ending 31 March 2013.
Share capital
During the year under review, there was no change in the share capital of the Company.
Directors Responsibility statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the company at the end of the financial year 2012-13 and of net loss of the companyfor that period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Directors
Mr. G V Prasad, retires by rotation at the ensuing Annual General Meeting scheduled on 29 July 2013and being eligible seeks re-appointment. Your Directors recommends his re-appointment for yourapproval at the ensuing AGM.
Mr. Umang Vohra resigned from the Board of Directors of the Company and ceases to be a Directorof the Company with effect from 11 February 2013. The Board accorded its deep appreciation for theservices rendered by him during his term.
The Board of Directors had appointed Mr. Saumen Chakraborty as an Additional Director on theBoard of Directors of the Company on 11 February 2013. He will hold this office till the conclusion ofthe 23rd Annual General Meeting of the Company. Requisite notice under Section 257 of the Companies
DIRECTORS’ REPORT
Cheminor Investments Limited 97
Act, 1956 has been received from a member proposing his appointment. It is proposed to appoint himas a Director of the Company liable to retire by rotation. The resolution for the same has been includedin the notice of the 23rd Annual General Meeting of the Company.
Auditors
The Statutory Auditors of the Company M/s. A. Ramachandra Rao & Co., Chartered Accountants,retire at the ensuing 23rd Annual General Meeting and have confirmed their eligibility and willingnessto accept office of auditors, if re-appointed. The Board of Directors recommend re-appointment of M/s. A. Ramachandra Rao & Co., Chartered Accountants as Statutory Auditors of the Company for thefinancial year 2013-14 for shareholder’s approval.
Compliance Certificate
Pursuant to the provisions of Section 383A of the Companies Act, 1956, a certificate issued by aCompany Secretary in whole time practice with regard to compliance with the provisions of theCompanies Act, 1956 is enclosed as Annexure – I.
Particulars of Employees
There are no employees who are drawing salary more than the amount as specified under the provisionsof Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees)Rules, 1975 as amended from time to time. Hence the relevant provisions are not applicable to yourCompany.
Conservation of energy, research and developments, technology absorption, foreign exchangeearnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgements
Your Directors place on record their sincere appreciation for support and co-operation extended by allthe concerned to the Company during the year.
for and on behalf of the Board of Directors
Place : Hyderabad Satish Reddy Saumen ChakrabortyDate : 10 May 2013 Director Director
Cheminor Investments Limited 98
ToThe Members ofM/s. Cheminor Investments LimitedHyderabad
We have audited the accompanying financial statements of Cheminor Investments Ltd whichcomprise the Balance Sheet as at 31 March 2013, and the Statement of Profit and Loss and CashFlow Statement for the year then ended, and a summary of significant accounting policies and otherexplanatory information.
Management is responsible for the preparation of these financial statements that give a true and fairview of the financial position, financial performance and cash flows of the Company in accordancewith the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act,1956. This responsibility includes the design, implementation and maintenance of internal controlrelevant to the preparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with the Standards on Auditing issued by the Institute of CharteredAccountants of India. Those Standards require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether the financial statements are freefrom material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made by management,as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion.
01. In our opinion and to the best of our information and according to the explanations given to us,the financial statements give the information required by the Act in the manner so required andgive a true and fair view in conformity with the accounting principles generally accepted inIndia:
a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March2013;
b) in the case of the Profit and Loss Account, of the loss for the year ended on that date;and
c) in the case of the Cash Flow Statement, of the cash flows for the year ended on thatdate.
02. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Governmentof India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure astatement on the matters specified in paragraphs 4 and 5 of the Order.
AUDITOR’S REPORT
Cheminor Investments Limited 99
03. As required by section 227(3) of the Act, we report that:
a) we have obtained all the information and explanations which to the best of our knowledgeand belief were necessary for the purpose of our audit;
b) in our opinion proper books of account as required by law have been kept by the Companyso far as appears from our examination of those books
c) the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt withby this Report are in agreement with the books of account.
d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statementcomply with the Accounting Standards referred to in subsection (3C) of section 211 ofthe Companies Act, 1956;
e) on the basis of written representations received from the directors as on 31 March 2013,and taken on record by the Board of Directors, none of the directors is disqualified as on31 March 2013, from being appointed as a director in terms of clause (g) of sub-section(1) of section 274 of the Companies Act, 1956.
f) Since the Central Government has not issued any notification as to the rate at which thecess is to be paid under section 441A of the Companies Act, 1956 nor has it issued anyRules under the said section, prescribing the manner in which such cess is to be paid, nocess is due and payable by the Company.
For A. Ramachandra Rao & Co.,Chartered AccountantsICAI FRN No. 002857S
A. Ramachandra RaoPlace : Hyderabad PartnerDate : 10 May 2013 Membership No. 9750
Cheminor Investments Limited 100
i. a) The Company has maintained proper records showing full particulars including quantitativedetails and situation of fixed assets.
b) All the Fixed Assets have not been physically verified by the management during theyear but there is a regular program of verification which, in our opinion, is reasonablehaving regard to the size of the Company and nature of its assets and to the best of ourknowledge no material discrepancies were noticed on such verification;.
c) In our opinion, the Company has not disposed off substantial part of fixed assets duringthe year and the going concern status of the Company is not affected.
ii. The company does not have any inventories and hence, in our opinion ,clauses 4(ii)(a) to (c)are not applicable to the company.
iii. Based on the information and explanations provided to us, the company has not granted ortaken any loans, secured or unsecured, to companies, firms or other parties covered in theregister maintained u/s 301 of the Act during the year. Accordingly the sub-clauses (b),(c),(d)of clause 4(iii) are not applicable for the year.
iv. In our opinion and according to the information and explanations given to us, there is an adequateinternal control procedures commensurate with the size of the Company and the nature of itsbusiness for the purchase of inventory and fixed assets and also for the sale of goods andservices . During the course of our audit, we have not observed any continuing failure to correctmajor weaknesses in internal control system.
v. In our opinion, and according to the information and explanations given to us, we are of theopinion that the company has not entered into any transactions that need to be entered into theregister maintained under section 301 of the companies act 1956 and hence the Sub clause (v)is not applicable to the company for the year.
vi. Based on the information provided to us, in our opinion, the Company has not accepted anyDeposits from the public during the year and hence, in our opinion, the Clause 4(vi) is notapplicable to the company for the year;
vii. In our opinion, the company has an internal audit system to commensurate with its size andnature of its business.
viii. We are of the opinion, based on the information provided to us, that the Central Governmenthas not prescribed any accounts and records, which are required to be maintained undersection 209(1)(d) of the Act .
ix. (a) According to the records of the company, the company is regular in depositing theundisputed statutory dues including Sales tax, Income-tax, Customs duty, Excise dutyand Employees State Insurance and Provident Fund and cess, investor education fundwith the appropriate authorities. We have been informed that the provisions of Employeesstate Insurance, Wealth tax and excise duty are not applicable to the company.
(b) According to the information and explanations given to us, there are no dues of salestax/income tax/ customs duty/Wealth tax /excise duty/cess to be deposited on accountof any dispute;
(c) Further, since the Central Government has till date not prescribed the amount of cesspayable under section 441A of the companies act 1956,we are not in a position to commentupon the regulatory or otherwise of the company in depositing the same.
ANNEXURE TO THE AUDITORS’ REPORT(Of even date referred to in Para (2) of our Report)
Cheminor Investments Limited 101
x. In our opinion the accumulated losses of the company are not more than fifty percent of its networth. The company has incurred cash losses during the financial year covered by our auditand immediately preceding the financial year.
xi. Based on the information provided and explanation given to us, the company has not taken anyloans from banks and hence the clause 4(xi) is not applicable to the company for the year.
xii. In our opinion and according to the information and explanation given to us, no loans andadvances have been granted by the company on the basis of security by way of pledge ofshares, debentures and other securities.
xiii. In our opinion, the Company is not a Chit fund or Nidhi / Mutual Benefit Fund / Society andhence clause 4(xiii) of the Companies (Auditor’s Report) Order 2003 is not applicable to theCompany.
xiv. Based on the information given to us, the Company has not dealt or traded in shares, securities,debentures or other investments during the year.
xv. Based on the information provided to us, the Company has not given guarantees for loanstaken by others from Banks or Financial Institutions.
xvi. According to the information and explanations given to us, the company has not obtained anyterm loans during the year and hence clause 4(xvi) of the order is not applicable to the company.
xvii. According to the information and explanations given to us, and on an overall examination of theBalance Sheet of the Company, we are of the opinion that the funds raised on short term basishave not been used for long term investment;
xviii. Based on the information provided and explanations offered, during the year, the Companyhas not made any preferential allotment of shares to parties and companies covered in theregister maintained u/s 301 of the Companies Act 1956 and hence sub clause (xvii) of the orderis not applicable to the company for the year.
xix. The Company has not issued any debentures and not created any securities or charges inrespect of any debentures.
xx. The Company has not raised any money by way of Public Issue during the year.
xxi. In our opinion and according to the information provided and explanations offered to us, nofraud on or by the Company has been noticed or reported during the year.
For A. Ramachandra Rao & Co.,Chartered AccountantsICAI FRN No. 002857S
A. Ramachandra RaoPlace : Hyderabad PartnerDate : 10 May 2013 Membership No. 9750
Cheminor Investments Limited 102
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders' FundsShare capital 2.1 1,346 1,346Reserves and surplus 2.2 (155) (137)
1,190 1,209
Current liablitiesOther current liabilities 2.3 31 20
31 20
TOTAL 1,222 1,229ASSETSNon-current assetsFixed assets Tangible Assets 2.4 1,209 1,209
1,209 1,209Current assetsTrade receivables 2.5 - 7Cash and bank balances 2.6 13 13
13 20
TOTAL 1,222 1,229
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy Saumen ChakrabortyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Cheminor Investments Limited 103
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
Income - -
- -ExpensesOther expenses 2.7 18 11
Total expenses 18 11
Loss before exceptional andextraordinary items and tax (18) (11)Exceptional items - -
Loss before extraordinary items and tax (18) (11)Extraordinary Items - -
Loss before tax (18) (11)Tax expense Current tax - - Deferred tax - -
Loss for the year (18) (11)
Earnings per shareBasic - Par value ` 10 per share 2.8 (0.137) (0.082)Diluted - Par value ` 10 per share (0.137) (0.082)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy Saumen ChakrabortyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Cheminor Investments Limited 104
Cash Flow Statement
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars year ended year ended
31 March 2013 31 March 2012
Cash flow from operating activities
Loss for the period (18) (11)
Add : Bad debts written off 7 -
Operating profit before working capital changes (11) (11)Increase in Other Current Liabilities 11 11
Cash generated from Operations - -Less: Income tax paid - -
Net cash provided by operating activities - -Cash flows From/(Used In) investing activities - -Cash flows From/(Used In) financing activites - -
Net increase/(decrease) in cash & bank balances - -
Cash & bank balances at the beginning of the year 13 13
Cash & bank balances at the end of the year 13 13
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy Saumen ChakrabortyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Cheminor Investments Limited 105
Note 1: Significant Accounting Policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation
The financial statements have been prepared and presented in accordance with Indian GenerallyAccepted Accounting Principles (GAAP) under the historical cost convention on the accrualbasis. GAAP comprises accounting standards notified by the Central Government of Indiaunder section 211(3C) of Companies Act 1956, other pronouncements of Institute of CharteredAccountants of India, provisions of Companies Act 1956. The financial statements are roundedoff to the nearest thousands.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian RupeesThousands, for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Actual results could differ from these estimates.Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision toaccounting estimates is recognised prospectively in the current and future periods.
c) Fixed assets, depreciation and amortisation
Fixed assets are carried at the cost of acquisition or construction less accumulated depreciation.The cost of fixed assets includes non-refundable taxes, duties, freight and other incidentalexpenses related to the acquisition and installation of the respective assets. Borrowing costsdirectly attributable to acquisition or construction of those fixed assets which necessarily take asubstantial period of time to get ready for their intended use are capitalized.
Land is not depreciated. Depreciation on other fixed assets is provided using the straight-linemethod at the rates specified in Schedule XIV to the companies Act, 1956 or based on theuseful life of the assets as estimated by Management whichever is higher. Depreciation iscalculated on a pro-rata basis from the date of installation till the date the assets are sold ordisposed off. Individual assets costing less than ` 5,000 are depreciated in full in the year ofacquisition.
d) Income-tax expense
Income tax expense comprises current tax and deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and thecorresponding deferred tax liabilities or assets are recognised using the tax rates that havebeen enacted or substantially enacted by the balance sheet date. Deferred tax assets are
Notes to Financial Statements
Cheminor Investments Limited 106
recognised only to the extent there is reasonable certainty that the assets can be realised infuture; however, where there is unabsorbed depreciation or carry forward of losses, deferredtax assets are recognised only if there is a virtual certainty of realisation of such assets.
Deferred tax assets are reviewed at each balance sheet date and are written-down or written-up to reflect the amount that is reasonably/virtually certain (as the case may be) to be realised.The break-up of the major components of the deferred tax assets and liabilities as at balancesheet date has been arrived at after setting off deferred tax assets and liabilities where theCompany has a legally enforceable right to set-off assets against liabilities and where suchassets and liabilities relate to taxes on income levied by the same governing taxation laws.
e) Earnings per share
The basic earnings per share (“EPS”) is computed by dividing the net profit after tax for the yearby the weighted average number of equity shares outstanding during the year. For the purposeof calculating diluted earnings per share, net profit after tax for the year and the weightedaverage number of shares outstanding during the year are adjusted for the effects of all dilutivepotential equity shares. The dilutive potential equity shares are deemed converted as of thebeginning of the period, unless they have been issued at a later date. The diluted potentialequity shares have been adjusted for the proceeds receivable had the shares been actuallyissued at fair value (i.e. the average market value of the outstanding shares).
f) Provisions and contingent liabilities
The Company creates a provision when there is a present obligation as a result of a past eventthat probably requires an outflow of resources and a reliable estimate can be made of theamount of the obligation. A disclosure for a contingent liability is made when there is a possibleobligation or a present obligation that may, but probably will not, require an outflow of resources.Where there is possible obligation or a present obligation in respect of which the likelihood ofoutflow of resources is remote, no provision or disclosure is made.
g) Investments
Non-current investments are carried at cost less any other-than-temporary diminution in value,determined separately for each individual investment. The reduction in the carrying amount isreversed when there is a rise in the value of the investment or if the reasons for the reductionno longer exist.
Current investments are carried at the lower of cost and fair value. The comparison of cost andfair value is done separately in respect of each category of investment.
h) Revenue recognition
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
Service income is recognised as per the terms of contracts with customers when the relatedservices are performed, or the agreed milestones are achieved.
Notes to Financial Statements
Note 1: Significant Accounting Policies (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Cheminor Investments Limited 107
Notes to Financial Statements
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capital
Authorised150,000 (previous year 150,000) equity shares of ` 10/- each 1,500 1,500200 (previous year 200) 12% Cumulative RedeemablePreference shares of ` 100/- each 20 20
Issued, Subscribed and paid- up134,513 (previous year 134,513) Equity Shares of `10/- each 1,345 1,345
8 (previous year 8) 12% Cumulative RedeemablePreference Shares of ` 100/- each 1 1
1,346 1,346
(a) Reconciliation of the shares outstanding at the beginning and at the end of reportingperiod
Equity Shares
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
shares shares
Number of shares at the beginning of the period 134,513 1,345 134,513 1,345
Issued during the period - - - -
Outstanding at the end of the period 134,513 1,345 134,513 1,345
Preference Shares
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
shares shares
Number of shares at the beginning of the period 8 1 8 1
Issued during the period - - - -
Outstanding at the end of the period 8 1 8 1
(b) Terms/rights attached to shares
Note 2: Notes to financial statements
Cheminor Investments Limited 108
The company has two class of shares consisting of equity shares having a par value of ` 10/- per share and 12% cumulative reedemable preference shares having a par value of ` 100/-per share. Each holder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012
Particulars No. of % holding No. of % holdingshares in the class shares in the class
Equity Shares -
Dr Reddy’s laboratories Ltd 134,508 99.99 134,508 99.99
Preference SharesG V Prasad 4 50 4 50K Anji Reddy 2 25 2 25K Deepti Reddy 2 25 2 25
Particulars As at As at31 March 2013 31 March 2012
2.2 : Reserves and surplusDeficitBalance in profit and loss account brought forward (137) (126)Add: Transfer from General Reserve - -
(137) (126)Add: Current Year Loss (18) (11)
(155) (137)
Balance Carried Forward (155) (137)
2.3 : Other Current liabilitiesPayable to holding company 7 7Outstanding Liabilities 24 13
31 20
Notes to Financial Statements
Note 2: Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Chem
inor Investments Lim
ited109
2.4 : Fixed assets (All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Gross Block Depreciation Net Block
Description As at Additions Deletions As at As at For the Deletions As at As at As at01.04.0212 31.03.2013 01.04.12 year 31.03.2013 31.03.2013 31.03.2012
Tangible Assets
Land 1,209 - - 1,209 - - - - 1,209 1,209
Total Tangible 1,209 - - 1,209 - - - - 1,209 1,209Assets
Previous year 1,209 - - 1,209 - - - - 1,209
Notes to F
inancial Statem
ents
Note 2: Notes to financial statements (Continued)
Cheminor Investments Limited 110
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars As at As at31 March 2013 31 March 2012
2.5 : Trade ReceivablesUnsecuredDebts outstanding for a period exceeding six months Considered good - 7
- 7Less: Provision for doubtful debts - -
- 7
2.6: Cash and bank balancesCash on hand - -Bank balances In current accounts 13 13
13 13
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.7 : Other expensesAuditors’ remuneration 11 11Bad debts Written Off 7 -
18 11
2.8 : Earnings per shareLoss for the year (18) (11)
Shares:Weighted average number of equity sharesoutstanding during the year - Basic 134,513 134,513Weighted average number of equity sharesoutstanding during the year - Diluted 134,513 134,513
Basic Earnings / (Loss) in ` per share (0.137) (0.082)Diluted Earnings / (Loss) in ` per share (0.137) (0.082)
Notes to Financial Statements
Note 2: Notes to financial statements (Continued)
Cheminor Investments Limited 111
2.9 : Comparitive Figures
Previous year’s figures have been regrouped / reclassified wherever necessary, to conform tocurrent year presentation.
2.10: Related Party Transaction
The company has the following amount due to related parties :
Particulars As at As at31 March 2013 31 March 2012
Due to related parties(included in other current liabilities)Dr Reddy’s Laboratories Ltd 7 7
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy Saumen ChakrabortyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2: Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Chienna B. V. 112
Dear Members,
Your Directors present the Annual Report of the Company for the period 15 February 2013 to 31March 2013.
Reddy Netherlands B.V. (RNBV) acquired the controlling stake of 93.1% on 15 February 2013 in thecompany. As on 31 March 2013, RNBV has a total share holding of 98.91% in the Company.
Financial Highlights
The following table gives the financial highlights of the Company for the period 15 February 2013 to31 March 2013:
(` in Thousands)
Particulars 15 February 2013-31 March 2013
Loss for the period after taxation (12,503)Balance brought forward (499,032)Balance carried forward to Balance Sheet (511,535)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the 31 March 2013 and of loss of the Company for theperiod 15 February 2013 to 31 March 2013;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared these accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the period.
for and on behalf of the Board of Directors
Place: Hyderabad OctoPlus N.V.Date: 10 May 2013 Director
DIRECTORS’ REPORT
Chienna B. V. 113
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Chienna B.V., a company incorporatedand administered outside India, which comprise the Balance Sheet as at 31 March 2013, and theStatement of Profit and Loss for the period 15 February 2013 to 31 March 2013, and a summary ofsignificant accounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the loss for the period 15 February 2013 to 31March 2013; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Chienna B. V. 114
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Chienna B. V. 115
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars Note 31 March 2013
EQUITY AND LIABILITIESShareholders’ funds
Share capital 2.1 1,405Reserves and surplus 2.2 (426,843)
(425,438)
Current liabilitiesShort term borrowings 2.3 5,147Trade payables 2.4 2,319Other current liabilities 2.5 763,061
770,527
TOTAL 345,089ASSETSCurrent assetsCash and bank balances 2.6 18Short term loans and advances 2.7 345,071
345,089
TOTAL 345,089
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao OctoPlus N.V.Partner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Chienna B. V. 116
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the periodParticulars Note 15 February 2013 -
31 March 2013
Income
Total revenue -
ExpensesEmployee benefits expense 2.8 8,682Finance costs 2.9 3,248Other expenses 2.10 573
Total expenses 12,503
Profit before tax (12,503)Tax expense 2.13 Current tax - Deferred tax -
Profit for the year (12,503)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao OctoPlus N.V.Partner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Chienna B. V. 117
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act, 1956, other pronouncements of Institute of Chartered Accountants of Indiaand provisions of Companies Act, 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
Chienna B. V. 118
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
e) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Chienna B. V. 119
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars 31 March 2013
2.1 : Share capitalAuthorised90,000 shares of Euro 1 each 6,426
Issued19,680 shares of Euro 1 each 1,405
Subscribed and paid-up19,680 shares of Euro 1 each 1,405
1,405
(a) Reconciliation of the equity shares outstanding is set out below:
Particulars No of Amountequity shares
Number of shares outstanding as at 15 February 2013 19,680 1,405Add : Shares issued during the period - -Number of shares outstanding as at 31 March 2013 19,680 1,405
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of Euro 1 per share. Eachholder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013Particulars No of equity % of equity
shares held shares held
OctoPlus N.V. 19,680 100
Notes to Financial Statements
Note 2 : Notes to financial statements
Chienna B. V. 120
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars 31 March 2013
2.2 : Reserves and surplusForeign currency translation reserveBalance as at 15 February 2013 -Additions / (deductions) during the period 148
148
Securities premium reserveBalance as at 15 February 2013 562,215Additions / (deductions) during the period -
562,215General ReserveBalance as at 15 February 2013 (477,671)Additions / (deductions) during the period -
(477,671)
DeficitBalance as at 15 February 2013 (499,032)Add: Current period loss (12,503)Balance carried forward (511,535)
(426,843)
2.3 : Short term borrowingsSecuredBank overdraft 5,147
5,147
2.4 : Trade PayablesPayable to others 2,319
2,319
2.5 : Other current liabilitiesDue to holding company and other group companies 756,700Accrued expenses 6,361
763,061
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Chienna B. V. 121
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars 31 March 2013
2.6 : Cash and bank balancesCash on hand -Bank balances In current accounts 18
18
2.7 : Short term loans and advances(Unsecured)Considered goodStaff loans and advances 39Balances with Statutory Agencies 690Prepaid expenses 1,371Advances to holding company and other group companies 342,971
345,071
For the periodParticulars 15 February 2013 -
31 March 2013
2.8 : Employee benefits expenseSalaries, wages and bonus 6,969Contribution to provident and other funds 1,545Staff welfare expenses 168
8,682
2.9 : Finance costsInterest Expenses 3,248
3,248
2.10 : Other expenseLegal and professional 10Travelling and conveyance 7Bank charges 1Miscellaneous 555
573
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Chienna B. V. 122
2.11: Commitments and contingent liabilities
There were no commitments or contingent liabilities as at 31 March 2013 (previous year: Nil).
2.12: Related Party Disclosures
The company has the following amount due to/from related parties :
As atParticulars31 March 2013
i) Due to related parties(included in Other current liabilities):OctoPlus Development B.V. 345,008OctoPlus N.V. 411,692
ii) Due from related parties(included in Short term loans and advances):OctoShare B.V. 146,796OctoPlus Technologies B.V. 191,478OctoPlus Sciences B.V. 4,697
2.13: Tax expense for the company is computed and presented together with the parent company's(OctoPlus N.V.) financial as per the tax laws of Netherlands.
2.14: Comparative Figures :
The company is a 100% subsidiary of OctoPlus N.V.
Dr. Reddy's Laboratories Limited had acquired OctoPlus N.V. through its wholly owned stepdown subsidiary Reddy Netherlands B.V. on 15 February 2013, accordingly comparative figuresare not presented.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao OctoPlus N.V.Partner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Chirotech Technology Limited 123
DIRECTORS’ REPORT
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012Loss for the period after taxation (125,352) (169,906)Balance brought forward (1,214,196) (1,044,290)Balance carried forward to Balance Sheet (1,339,548) (1,214,196)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followed alongwith proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of this Act for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place : Hyderabad Satish Reddy G.V. PrasadDate : 10 May 2013 Director Director
Chirotech Technology Limited 124
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Chirotech Technology Limited , a companyincorporated and administered outside India, which comprise the Balance Sheet as at 31 March 2013,and the Statement of Profit and Loss for the year ended, and a summary of significant accountingpolicies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act,1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicable andrelevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carried outfor the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by management, as well as evaluating the overall presentation of thefinancial statements. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013; and
(b) in the case of the Statement of Profit and Loss, of the Loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
b. in our opinion proper books of account as required by law have been kept by the Company so far
AUDITORS’ REPORT
Chirotech Technology Limited 125
as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreement withthe books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to the extentapplicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Chirotech Technology Limited 126
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 66,734 66,734Reserves and surplus 2.2 (652,554) (526,477)
(585,820) (459,743)Non current liabilitiesLong term borrowings 2.3 19 19Deferred tax liabilities, net 2.18 2,854 -Other long term liabilities 2.5 863 -
3,736 19Current liablitiesTrade payables 2.4 875,064 700,751Other current liabilities 2.5 270,622 257,533
1,145,686 958,284
TOTAL 563,602 498,561ASSETSNon current assetsFixed assets Tangible assets 2.6 85,790 58,621 Intangible assets 2.6 1,423 1,879 Capital work-in-progress 10,882 26,784Deferred tax assets, net 2.18 - 6,991Long term loans and advances 2.7 694 321
98,789 94,596Current assetsInventories 2.8 10,631 9,996Trade receivables 2.9 311,747 262,849Cash and bank balances 2.10 30,432 45,260Short term loans and advances 2.11 110,621 83,074Other current assets 2.12 1,382 2,786
464,813 403,965
TOTAL 563,602 498,561Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G.V. PrasadPartner Director DirectorMembership No. 9750Place : HyderabadDate : 10 May 2013
Balance Sheet
Chirotech Technology Limited 127
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeSales, net 747,765 733,871Service income 45,888 95,093Other operating revenues 21,665 1,290
Revenue from operations 815,318 830,254
Other income 2.13 - 928
Total revenue 815,318 831,182
ExpensesCost of material consumed(including packing material consumed) 515,936 563,793Changes in inventories of finished goods,work-in-progress and Stock-in-trade 2.14 1,803 219Conversion charges - 11,173Employee benefits expense 2.15 180,776 209,266Depreciation and amortization expense 2.6 23,329 17,251Other expenses 2.16 208,934 200,288
Total expenses 930,778 1,001,990
Profit/ (Loss) before tax (115,460) (170,808)Tax expense Current tax - - Deferred tax 9,892 (902)
Profit/ (Loss) for the year (125,352) (169,906)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G.V. PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Chirotech Technology Limited 128
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under Section 211(3C) of theCompanies Act, 1956, other pronouncements of Institute of Chartered Accountants of India andprovisions of the Companies Act, 1956.
The financial statements have been prepared based on books, records and other returns maintainedby the subsidiary. The financial statements have been presented in Indian Rupees, for thelimited purpose of complying with Section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation of usefullife of tangible and intangible assets, assessment of recoverable amounts of deferred tax assets,provision for obligations relating to employees, provisions against litigations and impairment ofassets. Actual results could differ from these estimates. Estimates and underlying assumptionsare reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectivelyin the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
Notes to Financial Statements
Chirotech Technology Limited 129
d) the Company does not have an unconditional right to defer settlement of the liability for atleast 12 months after the reporting date. Terms of a liability that could, at the option of thecounterparty, result in its settlement by the issue of equity instruments do not affect itsclassification.
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intended use,as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ̀ 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of fixed assets are givenbelow:
YearsBuildings Factory and administrative buildings 20 to 50 Ancillary structures 3 to 15Plant and machinery 3 to 15Laboratory equipment 4 to 10Furniture, fixtures and office equipment (other than computer equipment) 3 to 5Computer equipment 3
e) Intangible assets and amortisation
Intangible assets are recorded at the consideration paid for acquisition including any importduties and other taxes (other than those subsequently recoverable by the enterprise from thetaxing authorities), and any directly attributable expenditure on making the asset ready for itsintended use.
Intangible assets are amortised on a systematic basis over the best estimate of their usefullives, commencing from the date the asset is available to the Company for its use.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Notes to Financial Statements
Chirotech Technology Limited 130
The management’s estimates of the useful lives for various categories of intangible assets areas follows:
YearsPatents, trademarks, etc. (including marketing/ distribution rights) 3 to 16
f) Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value (NRV) isthe estimated selling price in the ordinary course of the business, less the estimated costs ofcompletion and the estimated costs necessary to make the sale. Cost of inventories comprisesall cost of purchase, cost of conversion and other costs incurred in bringing the inventories totheir present location and condition.
The cost of all categories of inventory is determined using weighted average cost method.
g) Retirement benefits
Contributions payable employee pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
h) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactionssettled during the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
i) Revenue recognition
Sale of goods
Revenue is recognized when the significant risks and rewards of ownership have been transferredto the buyer, recovery of the consideration is probable, the associated costs and possible returnof goods can be estimated reliably, there is no continuing management involvement with thegoods and the amount of revenue can be measured reliably. Revenue from the sale of goods ismeasured at the fair value of the consideration received or receivable, net of returns, sales taxand applicable trade discounts and allowances. Revenue includes shipping and handling costsbilled to the customer.
Service Income
Revenue from services rendered, which primarily relate to contract research, is recognized in thestatement of profit and loss as the underlying services are performed. Upfront non-refundablepayments received under these arrangements are deferred and recognised as revenue over theexpected period over which the related services are expected to be performed.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Notes to Financial Statements
Chirotech Technology Limited 131
Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on the timeproportionate method.
j) Income-tax expense
Income tax expense comprises current tax and deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and the correspondingdeferred tax liabilities or assets are recognised using the tax rates that have been enacted orsubstantially enacted by the balance sheet date. Deferred tax assets are recognised only to theextent there is reasonable certainty that the assets can be realised in future; however, wherethere is unabsorbed depreciation or carry forward of losses, deferred tax assets are recognisedonly if there is a virtual certainty of realisations of such assets. Deferred tax assets are reviewedas at each balance sheet date and written-down or written-up to reflect the amount that is reasonably/ virtually certain (as the case may be) to be realised.
Deferred tax assets and liabilities are offset where the Company has a legally enforceable right toset-off assets against liabilities representing current tax, and where such assets and liabilitiesrelate to taxes on income levied by the same governing taxation laws.
k) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of past eventsand it is probable that an outflow of resources embodying economic benefits will be required tosettle the obligation. Provisions are recognised at the best estimate of the expenditure requiredto settle the present obligation at the balance sheet date. Provisions are measured on anundiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certain thatan inflow of economic benefits will arise, the asset and related income are recognised in theperiod in which the change occurs.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Notes to Financial Statements
Chirotech Technology Limited 132
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised108,298,978 (previous year 108,298,978) shares of0.10 each in GBP 67,055 67,055
Issued107,780,577 (previous year 107,780,577) shares of0.10 each in GBP 66,734 66,734
Subscribed and paid-up107,780,577 (previous year 107,780,577) shares of0.10 each in GBP 66,734 66,734
66,734 66,734
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 107,780,577 66,734 107,780,577 66,734Add: Share issued during the year - - - -
Number of shares outstandingat the end of the year 107,780,577 66,734 107,780,577 66,734
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of GBP 0.10 per share.Each holder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars No. of Equity % equity No. of Equity % equity
shares held shares held shares held shares held
Dr. Reddy's Laboratories (EU) Limited 107,780,577 100 107,780,577 100
Notes to Financial Statements
Note 2 : Notes to financial statements
Chirotech Technology Limited 133
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year (52,720) (7,219)Additions / (deductions) during the year (725) (45,501)
(53,445) (52,720)Securities premium reserveBalance at the beginning of the year 740,439 740,439Additions / (deductions) during the year - -
740,439 740,439DeficitBalance at the beginning of the year (1,214,196) (1,044,290)Add: Current year less (125,352) (169,906)
Balance carried forward (1,339,548) (1,214,196)
(652,554) (526,477)
2.3 : Long term borrowingsBorrowings from holding company and other group companies 19 19
19 19
2.4 : Trade PayablesPayables to holding company and other group companies 852,075 686,398Payables to others 22,989 14,353
875,064 700,751
2.5 : Other liabilitiesa) Other long term liabilities
Deferred revenue - non current 863 -
863 -b) Other current liabilities
Due to capital creditors 14,276 12,248Due to holding company and other group companies - 683Accrued expenses 127,181 122,859Salary and Bonus payable 49,112 34,099Due to statutory authorities 13,091 11,101Sales and use tax payable 23,004 21,029Other current liabilities 43,958 55,514
270,622 257,533
Chirotech T
echnology Limited
134
Notes to F
inancial Statem
ents2.6 : Fixed assets (All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Description
Gross Block Depreciation / Amortisation Net Block
As at Additions Deletions Forex As at As at For the Year Deletions Forex As at As at As at
01.04.2012 31.03.2013 01.04.2012 31.03.2013 31.03.2013 31.03.2012
Building 14,936 - - 141 15,077 2,571 4,204 - (149) 6,626 8,451 12,365
Plant & Machinery 55,473 11,798 - (242) 67,029 28,814 4,792 - 3 33,609 33,420 26,659
Lab Equipment 8,018 35,616 - (1,302) 42,332 2,794 6,582 - (166) 9,240 33,122 5,224
Office equipment 1,925 1,835 - 15 3,775 60 1,088 - 8 2,765 1,010 1,865
Furniture and Fixtures 15,214 1,422 - 204 16,840 4,315 4,508 - (161) 8,662 8,178 10,899
Computers 8,548 - - 30 8,578 6,939 1,659 - (20) 6,939 1,609 1,609
Total Tangible Assets (A) 104,114 50,671 - (1,156) 153,631 45,493 22,833 - (485) 67,841 85,790 58,621
Patents and Trademarks 3,271 - - 88 3,359 1,392 496 - 48 1,936 1,423 1,879
Total Intangible Assets (B) 3,271 - - 88 3,359 1,392 496 - 48 1,936 1,423 1,879
TOTAL (A+B) 107,385 50,671 - (1,068) 156,990 46,885 23,329 - (436) 69,777 87,213 60,500
Previous year 59,921 74,652 - 9,988 107,385 23,380 17,251 - 7,334 46,885 60,500
Note 2 : Notes to financial statements (Continued)
Chirotech Technology Limited 135
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.7 : Long term loans and advances(Unsecured)Considered goodSecurity Deposits 694 321
694 321
2.8 : Inventories(Valued on weighted average basis)Raw materials 10,590 8,152Work-in-progress 41 -Finished goods - 1,844
10,631 9,996
2.9 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months - -Other debts Considered good 213,376 138,642Receivables from holding company and other group companies 98,371 124,207
311,747 262,849Less: Provision for doubtful debts - -
311,747 262,849
2.10 : Cash and bank balancesCash on hand 107 105Bank balances In current accounts 30,325 45,155
30,432 45,260
2.11 : Short term loans and advances(Unsecured)Considered goodAdvances to material suppliers 21 -Staff loans and advances 210 238Advance tax, net of provision for income taxes 55,849 17,494Balances with Statutory Agencies 48,630 37,397Prepaid expenses 5,603 27,945Other Advances 308 -
110,621 83,074
Chirotech Technology Limited 136
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.12 : Other current assetsConsidered goodOther receivables from holding companyand other group companies 1,382 2,786
1,382 2,786
For the year ended For the year endedParticulars 31 March 2013 31 March 2012
2.13 : Other incomeInterest income - 928
- 928
2.14 : Changes in inventories of finished goods,work in progress and stock in tradeNet (increase) / decrease in stockOpening
Finished goods 1,844 2,062Closing
Work-in-process 41 -Finished goods - 1,844
Net (increase) 1,803 219
2.15 : Employee benefits expenseSalaries, wages and bonus 170,444 202,089Staff welfare expenses 10,332 7,177
180,776 209,266
Chirotech Technology Limited 137
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the year ended For the year endedParticulars 31 March 2013 31 March 2012
2.16 : Other expenseConsumption of Stores and spare parts 28,783 25,691Legal and professional 13,710 13,976Carriage outward 2,525 1,429Rates and taxes 24,444 23,503Other selling expenses 1,556 2,916Repairs and maintenance Buildings 1,207 1,444 Plant and machinery 9,273 10,354 Others 24,101 22,909Power and fuel 15,990 13,820Travelling and conveyance 14,030 11,431Communication 5,089 3,288Rent 61,651 53,035Insurance 1,674 1,240Foreign exchange loss, net 2,348 1,207Donations 1 69Printing and stationery 1,708 1,714Bank charges 412 269Auditors' remuneration Audit fees 432 387Miscellaneous - 11,606
208,934 200,288
Chirotech Technology Limited 138
2.17: Deferred taxation
Deferred tax liability, net included in the balance sheet comprises the following:
As at As atParticulars 31 March 2013 31 March 2012
Deferred tax Assets / (liabilities)Other current assets 11,742 11,632Fixed assets (14,596) (4,641)
Diferred tax Asset, Net (2,854) 6,991
2.18: Related Party Transactions :
The company has the following amount due to/from related parties :
As at As atParticulars 31 March 2013 31 March 2012
i) Due from related parties (included in Trade Receivables):
Dr. Reddy’s Laboratories Limited 42,702 103,078Dr. Reddy’s Laboratories (EU) Limited 53,939 21,129Dr. Reddy’s Laboratories Inc. 1,730 -
ii) Due to related parties (included in Trade Payables):Dr. Reddy’s Laboratories Limited 56,037 22,322Dr. Reddy’s Laboratories (EU) Limited 796,038 664,076
iii) Due to related parties(included in Borrowings and Other liabilities):Dr. Reddy’s Laboratories Limited 19 702
iv) Due from related parties (included in Other Current Assets):Dr. Reddy’s Laboratories Limited - 2,778Dr. Reddy’s Laboratories Inc. 8 8Dr. Reddy’s Laboratories SA 1,374 -
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Chirotech Technology Limited 139
2.19 : Commitments and contingent liabilities
There were no commitments / contingent liabilities as at 31 March 2013 (Previous year ̀ 1,286)
2.20 : Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G.V. PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Dr. Reddy’s Farmaceutica Do Brasil Ltda. 140
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012
Profit/ (Loss) for the period after taxation 72,521 (24,763)Balance brought forward (1,037,924) (1,013,161)Balance carried forward to Balance Sheet (965,404) (1,037,924)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of profit of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place : Hyderabad VSS Seshagiri Rao VempatiDate : 10 May 2013 Director
DIRECTORS’ REPORT
Dr. Reddy’s Farmaceutica Do Brasil Ltda. 141
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Dr. Reddy’s Farmaceutica Do BrasilLtda., a company incorporated and administered outside India, which comprise the Balance Sheet asat 31 March 2013, and the Statement of Profit and Loss for the Year ended, and a summary ofsignificant accounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the Profit for the year ended on that date;and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Dr. Reddy’s Farmaceutica Do Brasil Ltda. 142
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Dr. Reddy’s Farmaceutica Do Brasil Ltda. 143
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 633,545 633,545Reserves and surplus 2.2 (965,404) (1,037,924)
(331,859) (404,379)
Non current liabilitiesLong term borrowings 2.3 262,596 232,358Other long term liabilities 2.4 103,402 147,945
365,998 380,303Current liabilitiesTrade payables 2.5 8,693 23,310Other current liabilities 2.4 56,772 116,441Short term provisions 2.6 - 36,278
65,465 176,029
TOTAL 99,604 151,953ASSETSNon current assetsFixed assets Tangible assets 2.7 5,340 656Deferred tax assets, net 2.20 50,904 85,650Long term loans and advances 2.8 3,147 1,258
59,391 87,564Current assetsInventories 2.9 846 841Trade receivables 2.10 215 5,016Cash and bank balances 2.11 11,507 30,936Short term loans and advances 2.12 25,345 27,596Other current assets 2.13 2,300 -
40,213 64,389
TOTAL 99,604 151,953Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao VSS Seshagiri Rao VempatiPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Dr. Reddy’s Farmaceutica Do Brasil Ltda. 144
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeSales, net 7,646 27,607License fees 92,809 78,130Other operating revenues 69,340 29,374
Revenue from operations 169,795 135,110Other income 2.14 376 2,026
Total revenue 170,171 137,136
ExpensesCost of material consumed(including packing material consumed) 6,126 43,284Employee benefits expense 2.15 31,938 33,200Finance costs 2.16 14,725 13,427Depreciation and amortization expense 2.7 7,368 4,200Other expenses 2.17 19,720 62,482
Total expenses 79,877 156,593
Profit / (Loss) before tax 90,294 (19,457)Tax expense Current tax (14,181) 5,129 Deferred tax 31,954 178
Profit / (Loss) for the year 72,521 (24,763)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao VSS Seshagiri Rao VempatiPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Dr. Reddy’s Farmaceutica Do Brasil Ltda. 145
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under Section 211(3C) ofCompanies Act, 1956, other pronouncements of Institute of Chartered Accountants of Indiaand provisions of the Companies Act, 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with Section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
Notes to Financial Statements
Dr. Reddy’s Farmaceutica Do Brasil Ltda. 146
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of fixed assets includes taxes, duties, freight and other incidental expenses related to theacquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intendeduse, as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000/- are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of fixed assets are givenbelow:
YearsPlant and machinery 3 to 15
e) Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value (NRV)is the estimated selling price in the ordinary course of the business, less the estimated costs ofcompletion and the estimated costs necessary to make the sale. Cost of inventories comprisesall cost of purchase, cost of conversion and other costs incurred in bringing the inventories totheir present location and condition.
The cost of all categories of inventory is determined using weighted average cost method.
f) Retirement benefits
Contributions payable to employees, pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Dr. Reddy’s Farmaceutica Do Brasil Ltda. 147
g) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
h) Revenue recognition
Sale of goods
Revenue from sale of goods is recognised when significant risks and rewards in respect ofownership of the products are transferred to the customer. Revenue from export sales isrecognised on shipment of products.
Service Income
Revenue from services rendered, which primarily relate to contract research, is recognized inthe statement of profit and loss as the underlying services are performed. Upfront non-refundablepayments received under these arrangements are deferred and recognised as revenue overthe expected period over which the related services are expected to be performed.
License fee
The Company enters into certain dossier sales, licensing and supply arrangements with variousparties. Some of these arrangements include certain performance obligations by the Company.Revenue from such arrangements is recognized in the period in which the Company completesall its performance obligations.
Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
i) Income-tax expense
Income tax expense comprises current tax and deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and the
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Dr. Reddy’s Farmaceutica Do Brasil Ltda. 148
corresponding deferred tax liabilities or assets are recognised using the tax rates that havebeen enacted or substantially enacted by the balance sheet date. Deferred tax assets arerecognised only to the extent there is reasonable certainty that the assets can be realised infuture; however, where there is unabsorbed depreciation or carry forward of losses, deferredtax assets are recognised only if there is a virtual certainty of realisations of such assets.Deferred tax assets are reviewed as at each balance sheet date and written-down or written-upto reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.
Deferred tax assets and liabilities are offset where the Company has a legally enforceable rightto set-off assets against liabilities representing current tax, and where such assets and liabilitiesrelate to taxes on income levied by the same governing taxation laws.
j) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Dr. Reddy’s Farmaceutica Do Brasil Ltda. 149
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised26,699,230 (previous year 26,699,230 )Equity shares of BRL 1 each 633,545 633,545
Issued26,699,230 (previous year 26,699,230 )Equity shares of BRL 1 each 633,545 633,545
Subscribed and paid-up26,699,230 (previous year 26,699,230 )Equity shares of BRL 1 each 633,545 633,545
633,545 633,545
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 26,699,230 633,545 26,699,230 633,545Add: Share issued during the year - - - -
Number of shares outstandingat the end of the year 26,699,230 633,545 26,699,230 633,545
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of BRL 1 per share. Eachholder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars No. of Equity % equity No. of Equity % equity
shares held shares held shares held shares held
Dr. Reddy’s Laboratories Limited 26,699,230 100 26,699,230 100
Notes to Financial Statements
Note 2 : Notes to financial statements
Dr. Reddy’s Farmaceutica Do Brasil Ltda. 150
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and SurplusDeficitBalance at the beginning of the year (1,037,924) (1,013,161)Add: Current year profit / (loss) 72,521 (24,763)
(965,404) (1,037,924)
2.3 : Long term borrowingsUnsecuredBorrowings from holding company and other group companies 262,596 232,358
262,596 232,358
2.4 : Other liabilitiesa) Other long term liabilities
Deferred revenue - non current 103,402 147,945
103,402 147,945
b) Other current liabilitiesAccrued expenses 17,355 22,064Salary and Bonus payable 350 7Due to statutory authorities 159 231Other current liabilities 38,908 94,139
56,772 116,441
2.5 : Trade PayablesPayables to holding company and other group companies 8,693 23,310
8,693 23,310
2.6 : Short term provisionsIncome tax payable - 36,278
- 36,278
Dr. R
eddy’s Farm
aceutica Do B
rasil Ltda.151
Notes to F
inancial Statem
ents
Note 2 : Notes to financial statements (Continued)
2.7 : Fixed assets (All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Gross Block Depreciation Net Block
Description As at Additions Deletions Forex As at As at For the Deletions Forex As at As at As at
01.04.2012 31.03.2013 01.04.2012 year 31.03.2013 31.03.2013 31.03.2012
Plant & 24,906 20,753 9,173 - 36,486 24,250 7,368 472 - 31,146 5,340 656Machinery
TOTAL 24,906 20,753 9,173 - 36,486 24,250 7,368 472 - 31,146 5,340 656
Previous Year 23,632 1,298 24 - 24,906 21,385 4,200 1,335 - 24,250 656 -
Dr. Reddy’s Farmaceutica Do Brasil Ltda. 152
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.8 : Long term loans and advances(Unsecured)Considered goodSecurity Deposits 3,147 1,258
3,147 1,258
2.9 : Inventories(Valued on weighted average basis)Finished goods 846 841
846 841
2.10 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months Considered good - - Considered doubtful 41,370 43,120Other debts Considered good - 3,701Receivables from holding company and other group companies 215 1,315
41,585 48,136Less: Provision for doubtful debts (41,370) (43,120)
215 5,016
Dr. Reddy’s Farmaceutica Do Brasil Ltda. 153
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.11 : Cash and bank balancesCash on hand 42 27Bank balances In current accounts 11,465 30,909
11,507 30,936
2.12 : Short term loans and advances(Unsecured)Considered goodAdvances to material suppliers 371 425Staff loans and advances 119 163Advance tax, net of provision for income taxes 13,451 26,998Balances with Statutory Agencies 1 -Prepaid expenses 60 -Other Advances 11,343 10
25,345 27,596
2.13 : Other current assetsConsidered goodOther receivables from holding company andother group companies 2,300 -
2,300 -
Dr. Reddy’s Farmaceutica Do Brasil Ltda. 154
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.14 : Other incomeInterest income 376 1,440Profit on sale of fixed assets, net - 586
376 2,026
2.15 : Employee benefits expenseSalaries, wages and bonus 15,221 14,003Staff welfare expenses 16,717 19,197
31,938 33,200
2.16 : Finance costsInterest Expenses 14,725 13,427
14,725 13,427
2.17 : Other expenseLegal and professional 8,925 8,760Carriage outward - 86Rates and taxes 2,822 8,335Other selling expenses - 136Travelling and conveyance 1,809 1,686Communication 1,508 1,585Rent 1,384 3,462Insurance 378 267Foreign exchange loss, net 734 25,971Printing and stationery 166 358Bank charges 91 408Loss on sale of fixed assets, net 75 -Miscellaneous 1,828 11,428
19,720 62,482
2.18: Contingencies and commitment liabilities
There were no commitments or contingent liabilities as on 31 March 2013 (previous year: Nil).
Dr. Reddy’s Farmaceutica Do Brasil Ltda. 155
2.19: Related party disclosures
The company has the following amount due to/from related parties :
Particulars As at As at31 March 2013 31 March 2012
i. Due to related parties (included in Borrowings):Dr. Reddy’s Laboratories Limited 262,596 232,358
ii. Due to related parties (included in Trade Payables):Dr. Reddy’s Laboratories Limited 8,693 23,310
iii. Due from related parties(included in Trade Receivables and other current assets):Dr. Reddy’s Laboratories Limited 2,515 1,315
2.20: Deferred taxation
Deferred tax asset, net included in the balance sheet comprises the following:
Particulars As at As at31 March 2013 31 March 2012
Deferred tax assets / (liabilities)Current liabilities 50,904 85,650
Deferred Tax Asset, net 50,904 85,650
2.21: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.22: The Company, incorporated in Brazil, is a 100% subsidiary of Dr. Reddy’s Laboratories Limited.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao VSS Seshagiri Rao VempatiPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Dr. Reddy's Laboratories (Proprietary) Ltd. 156
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Lakhs)
Particulars 31 March 2013 31 March 2012
Profit for the period after taxation 848 169Balance brought forward (216) (385)Balance carried forward to Balance Sheet 632 (216)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of profit of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of this Act for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating to con-servation of energy, technology absorption, foreign exchange earnings and outgo are not applicable toyour Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place: Hyderabad Satish Reddy M.V. NarasimhamDate: 10 May 2013 Director Director
DIRECTORS’ REPORT
Dr. Reddy's Laboratories (Proprietary) Ltd. 157
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Dr. Reddy’s Laboratories (Proprietary)Limited , a company incorporated and administered outside India, which comprise the Balance Sheetas at 31 March 2013, and the Statement of Profit and Loss for the year ended, and a summary ofsignificant accounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicable andrelevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carried outfor the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent appli-cable and relevant. Those Standards require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonable-ness of the accounting estimates made by management, as well as evaluating the overall presentationof the financial statements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013; and
(b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
b. in our opinion proper books of account as required by law have been kept by the Company so faras appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
Dr. Reddy's Laboratories (Proprietary) Ltd. 158
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreement withthe books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to the extentapplicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Dr. Reddy's Laboratories (Proprietary) Ltd. 159
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars Note31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 - -Reserves and surplus 2.2 632 (216)
632 (216)Non current liabilitiesLong term borrowings 2.3 - 99Other long term liabilities 2.4 120 199
120 298Current liabilitiesTrade payables 2.5 5,236 4,061Other current liabilities 2.4 310 245
5,546 4,306
TOTAL 6,298 4,388ASSETSNon current assetsFixed assets Tangible assets 2.6 111 145 Intangible assets 2.6 2 -Deferred tax assets, net 2.18 68 135Long term loans and advances 2.7 29 33
210 313Current assetsInventories 2.8 3,043 987Trade receivables 2.9 1,718 2,090Cash and bank balances 2.10 1,188 967Short term loans and advances 2.11 139 31
6,088 4,075
TOTAL 6,298 4,388
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy M.V. NarasimhamPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Dr. Reddy's Laboratories (Proprietary) Ltd. 160
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeSales, net 10,957 8,260License fees 79 79Other operating revenues 1 -
Revenue from operations 11,037 8,339Other income 2.12 332 40
Total revenue 11,369 8,379
ExpensesPurchase of stock-in-trade (traded goods) 7,750 4,432Changes in inventories of finished goods,work-in-progress and Stock-in-trade 2.13 (2,055) (174)Employee benefits expense 2.14 2,121 1,736Finance costs 2.15 25 7Depreciation and amortization expense 2.6 58 53Other expenses 2.16 2,399 2,078
Total expenses 10,297 8,132
Profit before tax 1,072 247Tax expense Current tax 173 98 Deferred tax 51 (20)
Profit for the year 848 169
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy M.V. NarasimhamPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Dr. Reddy's Laboratories (Proprietary) Ltd. 161
Note 1: Significant accounting policies(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) of CompaniesAct, 1956, other pronouncements of Institute of Chartered Accountants of India and provisions ofCompanies Act, 1956.
The financial statements have been prepared based on books, records and other returns maintainedby the subsidiary. The financial statements have been presented in Indian Rupees, for thelimited purpose of complying with Section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation of usefullife of tangible and intangible assets, assessment of recoverable amounts of deferred tax assets,provision for obligations relating to employees, provisions against litigations and impairment ofassets. Actual results could differ from these estimates. Estimates and underlying assumptionsare reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectivelyin the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability for atleast 12 months after the reporting date. Terms of a liability that could, at the option of thecounterparty, result in its settlement by the issue of equity instruments do not affect itsclassification.
Notes to Financial Statements
Dr. Reddy's Laboratories (Proprietary) Ltd. 162
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value (NRV) isthe estimated selling price in the ordinary course of the business, less the estimated costs ofcompletion and the estimated costs necessary to make the sale. Cost of inventories comprisesall cost of purchase, cost of conversion and other costs incurred in bringing the inventories totheir present location and condition.
The cost of all categories of inventory is determined using weighted average cost method.
e) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of fixed assets includes taxes, duties, freight and other incidental expenses related to theacquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intended use,as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of fixed assets are givenbelow:
Years
Furniture, fixtures and office equipment (other than computer equipment) 3 to 5
Computer equipment 3
Vehicles 3 to 5
Tenants improvements is being amortised over the primary period of lease.
f) Intangible assets and amortisation
Intangible assets are recorded at the consideration paid for acquisition including any importduties and other taxes (other than those subsequently recoverable by the enterprise from thetaxing authorities), and any directly attributable expenditure on making the asset ready for itsintended use.
Intangible assets are amortised on a systematic basis over the best estimate of their usefullives, commencing from the date the asset is available to the Company for its use.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Dr. Reddy's Laboratories (Proprietary) Ltd. 163
The management estimates the useful lives for the various intangible assets as follows:
YearsTechnical know-how 10Copyrights and Patents(including marketing / distribution rights) 3 to 10
g) Retirement benefits
Contributions payable to employees, pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
h) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
i) Revenue recognition
Sale of goods
Revenue from sale of goods is recognised when significant risks and rewards in respect ofownership of products are transferred to customers. Revenue from product sales is statedexclusive of returns, sales tax and applicable trade discounts and allowances.
License fee
The Company enters into certain licensing and supply arrangements with certain third parties.These arrangements include certain performance obligations by the company. Revenue fromsuch arrangements is recognized in the period in which the Company completes all its performanceobligations.
Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on the timeproportionate method.
j) Income-tax expense
Income tax expense comprises current tax and deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and the correspondingdeferred tax liabilities or assets are recognised using the tax rates that have been enacted or
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Dr. Reddy's Laboratories (Proprietary) Ltd. 164
substantially enacted by the balance sheet date. Deferred tax assets are recognised only to theextent there is reasonable certainty that the assets can be realised in future; however, wherethere is unabsorbed depreciation or carry forward of losses, deferred tax assets are recognisedonly if there is a virtual certainty of realisations of such assets. Deferred tax assets are reviewedas at each balance sheet date and written-down or written-up to reflect the amount that is reasonably/ virtually certain (as the case may be) to be realised.
Deferred tax assets and liabilities are offset where the Company has a legally enforceable right toset-off assets against liabilities representing current tax, and where such assets and liabilitiesrelate to taxes on income levied by the same governing taxation laws.
k) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of past eventsand it is probable that an outflow of resources embodying economic benefits will be required tosettle the obligation. Provisions are recognised at the best estimate of the expenditure requiredto settle the present obligation at the balance sheet date. Provisions are measured on anundiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certain thatan inflow of economic benefits will arise, the asset and related income are recognised in theperiod in which the change occurs.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Dr. Reddy's Laboratories (Proprietary) Ltd. 165
Notes to Financial Statements
Note 2 : Notes to financial statements
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capital
Authorised100 (previous year 100) ordinary shares of Rand 1 each* - -
Issued100 (previous year 100) ordinary shares of Rand 1 each* - -
Subscribed and paid-up100 (previous year 100) ordinary shares of Rand 1 each* - -
- -
*represents amount authorised, issued and paid-up of ̀ 472 (rounded off in lakhs in the above note).
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
ordinary shares ordinary shares
Number of shares outstandingat the beginning of the year 100 - 100 -Shares issued during the year - - - -
Number of shares outstandingat the end of the year 100 - 100 -
(b) Terms/rights attached to equity shares
The company has only one class of ordinary shares having a par value of Rand 1 per share. Eachholder of ordinary shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars No. of ordinary % equity No. of ordinary % equity
shares held shares held shares held shares held
Dr. Reddy's Laboratories Limited 100 100 100 100
Dr. Reddy's Laboratories (Proprietary) Ltd. 166
Notes to Financial Statements
Note 2 : Notes to financial statements
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplusSurplus / (deficit)Balance at the beginning of the year (216) (385)Add: Current year profit 848 169
632 (216)
2.3 : Long term borrowingsUnsecuredBorrowings from holding company and other group companies - 99
- 99
2.4 : Other liabilitiesa) Other long term liabilities
Deferred revenue - non current 120 199
120 199b) Other current liabilities
Accrued expenses 212 209Other current liabilities 98 36
310 245
2.5 : Trade PayablesPayables to holding company and other group companies 4,428 3,190Payables to others 808 871
5,236 4,061
Dr. R
eddy's Laboratories (Proprietary) Ltd.
167
Notes to F
inancial Statem
ents2.6 : Fixed assets (All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Description
Gross Block Depreciation / Amortisation Net Block
As at Additions Deletions Forex As at As at For the Year Deletions Forex As at As at As at
01.04.2012 31.03.2013 01.04.2012 31.03.2013 31.03.2013 31.03.2012
Lease Hold 81 3 25 - 59 31 13 22 - 22 37 50Improvements
Vehicles 23 1 4 - 20 3 5 3 - 5 15 20
Furniture, Fixtures 62 4 2 - 64 20 8 2 - 26 38 42
Computers 61 8 6 - 63 28 20 6 - 42 21 33
Total Tangible 227 16 37 - 206 82 46 33 - 95 111 145Assets (A)
Intangibles 42 14 - - 56 42 12 - - 54 2 -
Total Intangible 42 14 - - 56 42 12 - - 54 2 -Assets (B)
TOTAL (A+B) 269 30 37 - 262 124 58 33 - 149 113 145
Previous year 169 102 1 - 269 71 53 - - 124 145
Note 2 : Notes to financial statements (Continued)
Dr. Reddy's Laboratories (Proprietary) Ltd. 168
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.7 : Long term loans and advances(Unsecured)Considered goodSecurity Deposits 29 33
29 33
2.8 : Inventories(Valued on weighted average basis)Stock-in-trade (in respect of goods acquired for trading) 3,043 987
3,043 987
2.9 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months Considered good 71 - Considered doubtful 37 13Other debts Considered good 1,639 2,084Receivables from holding company and other group companies 8 6
1,755 2,103Less: Provision for doubtful debts (37) (13)
1,718 2,090
2.10 : Cash and bank balancesCash on hand - -Bank balances In current accounts 1,188 967
1,188 967
2.11 : Short term loans and advances(Unsecured)Considered goodStaff loans and advances 6 3Advance tax, net of provision for income taxes 11 7Prepaid expenses 14 6Other Advances 108 15
139 31
Dr. Reddy's Laboratories (Proprietary) Ltd. 169
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.12 : Other incomeInterest income 57 32Foreign exchange gain, net 275 8
332 40
2.13 : Changes in inventories of finished goods,work in progress and stock in tradeNet (increase) / decrease in stockOpening
Stock in trade 987 813Closing
Stock in trade 3,043 987
Net (increase) / decrease in stock (2,055) (174)
2.14 : Employee benefits expenseSalaries, wages and bonus 2,093 1,688Staff welfare expenses 28 48
2,121 1,736
2.15 : Finance costsInterest Expenses 25 7
25 7
Dr. Reddy's Laboratories (Proprietary) Ltd. 170
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.16 : Other expenseLegal and professional 104 46Carriage outward 103 92Other selling expenses 664 660Repairs and maintenance Buildings - 14Travelling and conveyance 63 72Communication 80 56Rent 159 152Insurance 39 36Provision - Advances & Debtors 26 -Printing and stationery 50 60Bank charges 8 6Advertisements 890 606Miscellaneous 213 278
2,399 2,078
2.17: Commitments and contingent liabilities
There were no commitments or contingent liabilities as at 31 March 2013 (previous year: Nil).
2.18: Deferred taxation
Deferred tax asset, net included in the balance sheet comprises the following:
Particulars As at As at31 March 2013 31 March 2012
Deferred tax assets / (liabilities) :Trade receivables 4 (5)Provisions 17 17Inventories 10 16Other current assets (4) (1)Other current liabilities (21) 7Fixed assets 62 101
Deferred Tax Asset, net 68 135
Dr. Reddy's Laboratories (Proprietary) Ltd. 171
2.19: Related party Disclosures
The company has the following amount due to/from related parties :
As at As atParticulars 31 March 2013 31 March 2012
i. Due from related parties(included in Trade Receivables)Dr. Reddy’s Laboratories Ltd. 8 6
ii. Due to related parties (included in Borrowings)Dr. Reddy’s Laboratories Ltd. - 99
iii. Due to related parties (included in Trade Payables)Dr. Reddy’s Laboratories Ltd. 4,428 3,190
2.20: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification
2.21: The Company, incorporated in the South Africa, is a 100% subsidiary of Dr. Reddy’s LaboratoriesLtd.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy M.V. NarasimhamPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Dr Reddy’s Laboratories Inc 172
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Lakhs)
Particulars 31 March 2013 31 March 2012
Profit/ (Loss) for the period after taxation 327 (2,670)Balance brought forward 41,027 43,697Balance carried forward to Balance Sheet 41,354 41,027
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of profit of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place : Hyderabad Satish Reddy G.V. PrasadDate : 10 May 2013 Director Director
DIRECTORS’ REPORT
Dr Reddy’s Laboratories Inc 173
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Dr. Reddy’s Laboratories Inc ., a companyincorporated and administered outside India, which comprise the Balance Sheet as at 31 March2013, and the Statement of Profit and Loss for the year ended, and a summary of significant accountingpolicies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the Profit for the year ended on that date;and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Dr Reddy’s Laboratories Inc 174
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Dr Reddy’s Laboratories Inc 175
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars Note31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 5,802 5,802Reserves and surplus 2.2 50,010 46,719
55,812 52,521Non current liabilitiesLong term borrowings 2.3 2 28Other long term liabilities 2.4 65 129
67 157Current liabilitiesShort term borrowings 2.3 - 25,463Trade payables 2.5 174,553 99,696Other current liabilities 2.4 12,904 5,783Short term provisions 2.6 10,379 6,807
197,836 137,749
TOTAL 253,715 190,427ASSETSNon current assetsFixed assets Tangible assets 2.7 250 672 Intangible assets 2.7 213 -Non current investments 2.8 45,825 44,684Deferred tax assets, net 2.21 5,311 3,583Long term loans and advances 2.9 126 4,365
51,725 53,303Current assetsInventories 2.10 54,001 29,766Trade receivables 2.11 107,907 67,420Cash and bank balances 2.12 1,537 3,114Short term loans and advances 2.13 2,014 2,019Other current assets 2.14 36,531 34,804
201,990 137,123
TOTAL 253,715 190,427Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G.V. PrasadPartner Director DirectorMembership No. 9750
Place : Hyderabad Date : 10 May 2013
Balance Sheet
Dr Reddy’s Laboratories Inc 176
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeSales, net 406,809 331,455Service income 501 2,846License fees 65 1,765Other operating revenues 729 724
Revenue from operations 408,104 336,790Other income 2.15 38 34
Total revenue 408,142 336,824
ExpensesPurchase of stock-in-trade (traded goods) 376,976 291,055Changes in inventories of finished goods,work-in-progress and Stock-in-trade 2.16 (23,741) (99)Conversion charges 11,450 9,618Employee benefits expense 2.17 12,585 11,062Finance costs 2.18 343 736Depreciation and amortization expense 2.7 424 435Research and development 4,364 1,607Other expenses 2.19 17,635 22,847
Total expenses 400,036 337,261
Profit /(Loss) before tax 8,106 (436)Tax expense 2.23 Current tax 9,270 896 Deferred tax (1,491) 1,338
Profit /(Loss) for the year 327 (2,670)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G.V. PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Dr Reddy’s Laboratories Inc 177
Note 1: Significant accounting policies(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act 1956, other pronouncements of Institute of Chartered Accountants of India andprovisions of Companies Act 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability for atleast 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
Dr Reddy’s Laboratories Inc 178
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intendeduse, as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of fixed assets are givenbelow:
YearsFurniture, fixtures and office equipment (other than computer equipment) 3 to 5Computer equipment 3Lease hold improvements are amortised over the primary period of lease.
e) Intangible assets and amortisation
Intangible assets are recorded at the consideration paid for acquisition including any importduties and other taxes (other than those subsequently recoverable by the enterprise from thetaxing authorities), and any directly attributable expenditure on making the asset ready for itsintended use.
Intangible assets are amortised on a systematic basis over the best estimate of their usefullives, commencing from the date the asset is available to the Company for its use.
The management estimates the useful lives for the various intangible assets as follows:
YearsTechnical know-how 10Copyrights and Patents(including marketing / distribution rights) 3 to 10
An intangible asset is derecognised on disposal or when no future economic benefits areexpected from its use and disposal. Gains or losses arising from the disposal of intangibleasset are recognised in the statement of profit and loss.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Dr Reddy’s Laboratories Inc 179
f) Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value (NRV)is the estimated selling price in the ordinary course of the business, less the estimated costs ofcompletion and the estimated costs necessary to make the sale. Cost of inventories comprisesall cost of purchase, cost of conversion and other costs incurred in bringing the inventories totheir present location and condition.
The cost of all categories of inventory is determined using weighted average cost method.
g) Retirement benefits
Contributions payable employee pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
h) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
i) Revenue recognition
Sale of goods
Revenue is recognized when the significant risks and rewards of ownership have been transferredto the buyer, recovery of the consideration is probable, the associated costs and possiblereturn of goods can be estimated reliably, there is no continuing management involvement withthe goods and the amount of revenue can be measured reliably. Revenue from the sale ofgoods is measured at the fair value of the consideration received or receivable, net of returns,sales tax and applicable trade discounts and allowances. Revenue includes shipping andhandling costs billed to the customer.
Revenue from sales of active pharmaceutical ingredients and intermediates in India is recognizedon delivery of products to customers. Revenue from sales of formulation products in India isrecognized upon delivery of products to distributors by clearing and forwarding agents of theCompany. Revenue from export sales is recognized when the significant risks and rewards ofownership of products are transferred to the customers, which is based upon the terms of theapplicable contract.
Accrual for chargeback, rebates, discounts and medicaid payments are estimated and providedfor in the year of sales and recorded as reduction of revenue. A chargeback claim is a claimmade by the wholesaler for the difference between the price at which the product is initiallyinvoiced to the wholesaler and the net price at which it is agreed to be procured from theCompany. Accrual for such chargeback is made considering the factors such as historicalaverage chargeback rate actually claimed over a period of time, current contract prices withwholesalers / other customers and estimated inventory holding by the wholesaler.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Dr Reddy’s Laboratories Inc 180
The Company accounts for sales returns accrual by recording an allowance for sales returnsconcurrent with the recognition of revenue at the time of a product sale. This allowance isbased on the Company’s estimate of expected sales returns.
Profit share revenues
From time to time the Company enters into marketing arrangements with certain businesspartners for the sale of its products in certain markets. Under such arrangements, the Companysells its products to the business partners at a price agreed upon in the arrangement and isalso entitled to a profit share which is over and above the agreed price. The profit share istypically dependent on the business partner’s ultimate net sale proceeds or net profit, subjectto any reductions or adjustments that are required by the terms of the arrangement.
Revenue in an amount equal to the agreed price is recognized on these transactions upondelivery of products to the business partners. The additional amount representing the profitshare component is recognized as revenue in the period which corresponds to the ultimatesales made by business partners only when the collectability of the profit share becomes probableand a reliable measure of the profit share is available. In arriving at this conclusion and inmeasuring the amount of profit share revenue to be recognized for such period, the Companyuses all available information and evidences relating to the amounts owed to the Companyunder these arrangements, such as confirmations provided by business partners, includingthose made available on or before the date of approval of financial statements.
Service Income
Revenue from services rendered, which primarily relate to contract research, is recognized inthe statement of profit and loss as the underlying services are performed. Upfront non-refundablepayments received under these arrangements are deferred and recognised as revenue overthe expected period over which the related services are expected to be performed.
License fee
The Company enters into certain dossier sales, licensing and supply arrangements with variousparties. Some of these arrangements include certain performance obligations by the Company.Revenue from such arrangements is recognized in the period in which the Company completesall its performance obligations.
Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
j) Income-tax expense
Income tax expense comprises current tax and deferred tax charge or credit.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and the
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Dr Reddy’s Laboratories Inc 181
corresponding deferred tax liabilities or assets are recognised using the tax rates that havebeen enacted or substantially enacted by the balance sheet date. Deferred tax assets arerecognised only to the extent there is reasonable certainty that the assets can be realised infuture; however, where there is unabsorbed depreciation or carry forward of losses, deferredtax assets are recognised only if there is a virtual certainty of realisations of such assets.Deferred tax assets are reviewed as at each balance sheet date and written-down or written-upto reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.
Deferred tax assets and liabilities are offset where the Company has a legally enforceable rightto set-off assets against liabilities representing current tax, and where such assets and liabilitiesrelate to taxes on income levied by the same governing taxation laws.
k) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
Onerous contracts
A contract is considered as onerous when the expected economic benefits to be derived by theCompany from the contract are lower than the unavoidable cost of meeting its obligationsunder the contract. The provision for an onerous contract is measured at the lower of theexpected cost of terminating the contract and the expected net cost of continuing with thecontract. Before a provision is established, the Company recognises any impairment loss onthe assets associated with that contract.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
l) Government grants
The Company recognizes government grants only when there is reasonable assurance thatthe conditions attached to them will be complied with, and the grants will be received. Governmentgrants received in relation to assets are presented as a reduction to the carrying amount of therelated asset. Revenue Grants are deducted in reporting the related expense.
m) Research and development
Expenditures on research activities undertaken with the prospect of gaining new scientific ortechnical knowledge and understanding are recognized in the statement of profit and losswhen incurred.
Development activities involve a plan or design for the production of new or substantially improvedproducts and processes. Development expenditures are capitalized only if:
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Dr Reddy’s Laboratories Inc 182
l Development costs can be measured reliably,
l The product or process is technically and commercially feasible,
l Future economic benefits are probable and ascertainable, and
l The Company intends to and has sufficient resources to complete development and hasthe ability to use or sell the asset.
Expenditure incurred on fixed assets used for research and development is capitalisedand depreciated in accordance with the depreciation policy of the Company.
n) Leases
The lease arrangement is classified as either a finance lease or an operating lease, at theinception of the lease, based on the substance of the lease arrangement.
Finance leases
A finance lease is a lease that transfers substantially all the risks and rewards incident toownership of an asset. A finance lease is recognized as an asset and a liability at thecommencement of the lease, at the lower of the fair value of the asset and the present value ofthe minimum lease payments. Initial direct costs, if any, are also capitalized and, subsequent toinitial recognition, the asset is accounted for in accordance with the accounting policy applicableto that asset. Minimum lease payments made under finance leases are apportioned betweenthe finance expense and the reduction of the outstanding liability. The finance expense isallocated to each period during the lease term so as to produce a constant periodic rate ofinterest on the remaining balance of the liability.
Operating leases
Other leases are operating leases, and the leased assets are not recognized on the Company’sbalance sheet. Payments made under operating leases are recognized in the statement ofprofit and loss on a straight-line basis over the term of the lease.
o) Investments
Investments that are readily realisable and intended to be held for not more than one year fromthe date of acquisition are classified as current investments. All other investments are classifiedas non-current investments.
Non-current investments are carried at cost less any other-than-temporary diminution in value,determined separately for each individual investment. The reduction in the carrying amount isreversed when there is a rise in the value of the investment or if the reasons for the reductionno longer exist. Any reduction in the carrying amount and any reversal in such reductions arecharged or credited to the statement of profit and loss.
Current investments are carried at the lower of cost and fair value. The comparison of cost andfair value is done separately in respect of each category of investment.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Dr Reddy’s Laboratories Inc 183
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised1,500,000 (previous year 1,500,000) shares of USD 10 each 6,735 6,735
Issued1,401,000 (previous year 1,401,000) shares of USD 10 each 5,802 5,802
Subscribed and paid-up1,401,000 (previous year 1,401,000) shares of USD 10 each 5,802 5,802
5,802 5,802
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 1,401,000 5,802 1,401,000 5,802Add: Share issued during the year - - - -
Number of shares outstandingat the end of the year 1,401,000 5,802 1,401,000 5,802
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of USD 10 per share.Each holder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars No. of % of equity No. of % of equity
shares held shares held shares held shares held
Dr. Reddy’s Laboratories Limited 401,000 29 401,000 29Dr. Reddy’s laboratories SA 1,000,000 71 1,000,000 71
Notes to Financial Statements
Note 2 : Notes to financial statements
Dr Reddy’s Laboratories Inc 184
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplusSecurities premium reserveBalance at the beginning of the year 8,102 8,102Additions / (deductions) during the year - -
8,102 8,102
Hedging ReserveBalance at the beginning of the year (2,410) -Additions / (deductions) during the year 2,964 (2,410)
554 (2,410)
SurplusBalance at the beginning of the year 41,027 43,697Add: Current year profit / (loss) 327 (2,670)
Balance carried forward 41,354 41,027
50,010 46,719
2.3 : Borrowingsa) Long term borrowings
SecuredLong term maturities of finance lease obligations 2 28
2 28b) Short term borrowings
UnsecuredOther short term loans - 25,463
- 25,463
Dr Reddy’s Laboratories Inc 185
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.4 : Other liabilitiesa) Other long term liabilities
Deferred revenue - non current 65 129
65 129
b) Other current liabilitiesCurrent maturities of finance lease obligations 28 -Due to capital creditors 25 -Due to holding company and other group companies 136 570Accrued expenses 5,678 2,327Salary and Bonus payable 2,820 2,627Due to statutory authorities 55 259Other current liabilities 4,162 -
12,904 5,783
2.5 : Trade PayablesPayables to holding company and other group companies 169,009 96,983Payables to others 5,544 2,713
174,553 99,696
2.6 : Short term provisionsProvision for employee benefits 1 1Other Provisions Allowance for sales returns 10,378 6,806
10,379 6,807
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Dr R
eddy’s Laboratories Inc186
Notes to F
inancial Statem
ents
Note 2 : Notes to financial statements (Continued)
2.7 : Fixed assets (All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Gross Block Depreciation / Amortisation Net Block
Description As at Additions Deletions Forex As at As at For the Deletions Forex As at As at As at
01.04.2012 31.03.2013 01.04.2012 year 31.03.2013 31.03.2013 31.03.2012
Lease hold 663 - - - 663 360 209 - - 569 94 209improvements
Electrical/ 178 9 - - 187 125 11 - - 136 51 53Office Equipment
Furniture, Fixtures 647 - 261 - 386 449 93 242 - 300 86 198
Computers 441 - - - 441 323 99 - - 422 19 118
Total Tangible 1,929 9 261 - 1,677 1,257 412 242 - 1,427 250 672Assets (A)
Softwares - 225 - - 225 - 12 - - 12 213 -
Total Intangible - 225 - - 225 - 12 - - 12 213 -Assets (B)
TOTAL (A+B) 1,929 234 261 - 1,902 1,257 424 242 - 1,439 463 672
Previous year 2,293 124 489 - 1,929 1,256 435 433 - 1,257 672
Dr Reddy’s Laboratories Inc 187
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.8 : Non current investmentsInvestments in Subsidiaries, associates and joint ventures 45,825 44,684Less: Provision for decline, other than temporary,in the value of long term investments - -
45,825 44,684
2.9 : Long term loans and advances(Unsecured)Considered goodLoan to holding company and other group companies 2 4,365Security Deposits 124 -
126 4,365
2.10 : Inventories(Valued on weighted average basis)Stock-in-trade (in respect of goods acquired for trading) 53,204 29,463Packing materials 797 304
54,001 29,766
2.11 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months Considered good 522 - Considered doubtful 769 489Other debts Considered good 107,385 67,236Receivables from holding company and other group companies - 184
108,676 67,909Less: Provision for doubtful debts (769) (489)
107,907 67,420
2.12 : Cash and bank balancesCash on hand - -Bank balances In current accounts 1,537 3,114
1,537 3,114
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Dr Reddy’s Laboratories Inc 188
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.13 : Short term loans and advances(Unsecured)Considered goodAdvances to material suppliers 892 522Staff loans and advances 8 6Advance tax, net of provision for income taxes 551 1,265Prepaid expenses 422 226Other Advances 141 -
Considered doubtfulOther advances recoverable in cash orin kind or for value to be received 457 436
2,471 2,455Less: Provision for doubtful loans and advances (457) (436)
2,014 2,019
2.14 : Other current assetsConsidered goodOther receivables from holding companyand other group companies 36,528 34,801Other current assets 3 3
36,531 34,804
Dr Reddy’s Laboratories Inc 189
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.15 : Other incomeInterest income 38 34
38 34
2.16 : Changes in inventories of finished goods,work in progress and stock in tradeNet (increase) / decrease in stockOpening Stock in trade 29,463 29,364
Closing Stock in trade 53,204 29,463
Net (increase) (23,741) (99)
2.17 : Employee benefits expenseSalaries, wages and bonus 10,165 9,240Contribution to provident and other funds 1,108 863Staff welfare expenses 1,312 959
12,585 11,062
2.18 : Finance costsInterest Expenses 343 736
343 736
Dr Reddy’s Laboratories Inc 190
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.19 : Other expenseLegal and professional 2,178 2,058Carriage outward 6,014 6,637Rates and taxes 100 153Other selling expenses 3,282 1,646Repairs and maintenance Buildings 3 4 Plant and machinery - 24 Others 2 87Travelling and conveyance 945 1,076Communication 391 402Rent 684 688Insurance 729 741Foreign exchange loss, net 1,637 7,301Donations 11 28Bad debts 28 62Provision - Advances & Debtors 243 504Printing and stationery 123 119Bank charges 41 26Loss on sale of fixed assets, net 16 -Auditors’ remuneration Audit fees 97 43Advertisements 229 356Miscellaneous 882 891
17,635 22,847
Dr Reddy’s Laboratories Inc 191
2.20: Contingencies and commitment
The company is involved in certain disputes, lawsuits and claims involving patent and commercialmatters that arise from time to time in the ordinary course of business. The Company believesthat there are no such pending matters that are expected to have any material adverse effecton its financial statements in any accounting period. Further, there were no commitments as at31 March 2013 (previous year Nil).
2.21: Deferred taxation
Deferred tax asset, net included in the balance sheet comprises the following:
Particulars As at As at31 March 2013 31 March 2012
Deferred tax assets / (liabilities)Losses carry forward - (270)Trade receivables 4,937 3,024Inventories 591 270Current Liabilities 658 -Other current Assets (692) 714Stock based compensation (1577) (1,190)Depreciation 1401 385Unrecognized Deferred Taxes (7) -Current Liabilities - 649
Deferred Tax Asset, net 5,311 3,583
2.22: Related Party Disclosures:The company has the following amount due to/from related parties :
Particulars As at As at31 March 2013 31 March 2012
i. Due from related parties(included in Advances and other assets):Dr. Reddy’s Laboratories Limited 4,003 3,563Promius Pharma LLC 27,065 22,251Aurigene Discovery Technologies Inc. 11 24Industrias Quimicas Falcon de Mexico, SA de CV 2 1,275Dr. Reddy’s Laboratories Louisiana LLC - 4,958Dr. Reddy’s Laboratories New York, Inc 5,268 6,327Dr. Reddy’s Laboratories Tennessee, LLC - 768Dr. Reddy’s Laboratories SA 181 -
ii. Due from related parties (included in Trade Receivables):Industrias Quimicas Falcon de Mexico, SA de CV - 184
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Dr Reddy’s Laboratories Inc 192
iii. Due to related parties (included in Trade Payables):Dr. Reddy’s Laboratories Limited 83,658 71,935Dr. Reddy’s Laboratories SA, Switzerland 69,763 24,255Industrias Quimicas Falcon de Mexico, SA de CV 1,268 253Dr. Reddy’s Laboratories (EU) Limited - 540Dr. Reddy’s Laboratories Louisiana LLC 11,630 -Dr. Reddy’s Laboratories Tennessee LLC 959 -betapharma Arzneimittel GmbH 1,713 -Chirotech Technology Limited 18 -
iv. Due to related parties(included in Borrowings and other liabilities):Dr. Reddy’s Laboratories SA, Switzerland - 570Dr. Reddy’s Laboratories Limited 136 -
2.23: The total tax expense for the company is computed and presented jointly with its subsidiarycompanies as per the laws of United States.
2.24: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.25: The Company is incorporated in the United States of America. Its 71% of shares are held by Dr.Reddy’s Laboratories SA and the balance 29% are held by Dr. Reddy's Laboratories Limited.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G.V. PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Particulars As at As at31 March 2013 31 March 2012
Notes to Financial Statements
Dr. Reddy’s Laboratories International SA 193
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012
Loss for the period after taxation (932) (896)Balance brought forward (1,512) (616)Balance carried forward to Balance Sheet (2,444) (1,512)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followed alongwith proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company for thatperiod;
3. We have taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of this Act for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place : Hyderabad G V Prasad Satish ReddyDate : 10 May 2013 Director Director
DIRECTORS’ REPORT
Dr. Reddy’s Laboratories International SA 194
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Dr.Reddy’s Laboratories InternationalSA., a company incorporated and administered outside India, which comprise the Balance Sheet as atMarch 31, 2013, and the Statement of Profit and Loss for the year ended, and a summary of significantaccounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act,1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicable andrelevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carried outfor the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by management, as well as evaluating the overall presentation of thefinancial statements. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013; and
(b) in the case of the Statement of Profit and Loss, of the Loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
b. in our opinion proper books of account as required by law have been kept by the Company so far
AUDITORS’ REPORT
Dr. Reddy’s Laboratories International SA 195
as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreement withthe books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to the extentapplicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Dr. Reddy’s Laboratories International SA 196
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 275,120 245,333Reserves and surplus 2.2 (2,444) (1,512)
272,676 243,821Current liablitiesOther current liabilities 2.3 654 116Short term provisions 2.4 195 32
849 148
TOTAL 273,525 243,969
ASSETSNon current assetsFixed assets Tangible assets 2.5 42,070 -Non current investments 2.6 225,299 225,299Long term loans and advances 2.7 - 15,057
267,369 240,356Current assetsCash and bank balances 2.8 6,103 3,462Short term loans and advances 2.9 53 151
6,156 3,613
TOTAL 273,525 243,969
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G.V. PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Dr. Reddy’s Laboratories International SA 197
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
Income
Other operating revenues 2,069 -
Revenue from operations 2,069 -Other income 2.10 864 2,663
Total revenue 2,933 2,663ExpensesEmployee benefits expense 2.11 - 619Depreciation and amortization expense 2.5 2,035 -Other expenses 2.12 1,683 2,860
Total expenses 3,718 3,479
Profit / (Loss) before tax (785) (816)Tax expense Current tax 147 80 Deferred tax - -
Profit / (Loss) for the year (932) (896)
Significant accounting policies 1
Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G.V. PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Dr. Reddy’s Laboratories International SA 198
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) of CompaniesAct 1956, other pronouncements of Institute of Chartered Accountants of India, provisions ofCompanies Act 1956.
The financial statements have been prepared based on books, records and other returns maintainedby the subsidiary. The financial statements have been presented in Indian Rupees, for thelimited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation of usefullife of tangible and intangible assets, assessment of recoverable amounts of deferred tax assets,provision for obligations relating to employees, provisions against litigations and impairment ofassets. Actual results could differ from these estimates. Estimates and underlying assumptionsare reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectivelyin the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability for atleast 12 months after the reporting date. Terms of a liability that could, at the option of thecounterparty, result in its settlement by the issue of equity instruments do not affect itsclassification.
Notes to Financial Statements
Dr. Reddy’s Laboratories International SA 199
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
e) Income-tax expense
Income tax expense comprises current tax and deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and the correspondingdeferred tax liabilities or assets are recognised using the tax rates that have been enacted orsubstantially enacted by the balance sheet date. Deferred tax assets are recognised only to theextent there is reasonable certainty that the assets can be realised in future; however, wherethere is unabsorbed depreciation or carry forward of losses, deferred tax assets are recognisedonly if there is a virtual certainty of realisations of such assets. Deferred tax assets are reviewedas at each balance sheet date and written-down or written-up to reflect the amount that is reasonably/ virtually certain (as the case may be) to be realised.
Deferred tax assets and liabilities are offset where the Company has a legally enforceable right toset-off assets against liabilities representing current tax, and where such assets and liabilitiesrelate to taxes on income levied by the same governing taxation laws.
f) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intended use,as on the balance sheet date, is shown as capital work-in-progress.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Notes to Financial Statements
Dr. Reddy’s Laboratories International SA 200
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000 are depreciated in full in the year of acquisition.
Management's estimate of the useful lives for various categories of fixed assets are given below:
Years
Plat and machinery 3 to 15
g) Provisions and Contingencies
A provision is recognised when the Company has a present obligation as a result of past eventsand it is probable that an outflow of resources embodying economic benefits will be required tosettle the obligation. Provisions are recognised at the best estimate of the expenditure requiredto settle the present obligation at the balance sheet date. Provisions are measured on anundiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certain thatan inflow of economic benefits will arise, the asset and related income are recognised in theperiod in which the change occurs.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Notes to Financial Statements
Dr. Reddy’s Laboratories International SA 201
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised6,900,000 (previous year: 4,600,000) Equity shares of CHF 1 each 372,221 245,333
Issued5,100,000 (previous year: 4,600,000) Equity shares of CHF 1 each 275,120 245,333
Subscribed and paid-up5,100,000 (previous year: 4,600,000) Equity shares of CHF 1 each 275,120 245,333
275,120 245,333
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 4,600,000 245,333 100,000 4,144Add: Share issued during the year 500,000 29,787 4,500,000 241,189
Number of shares outstandingat the end of the year 5,100,000 275,120 4,600,000 245,333
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of CHF 1 per share. Eachholder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars No. of Equity % equity No. of Equity % equity
shares held shares held shares held shares held
Dr. Reddy’s Laboratories SA 5,100,000 100 4,600,000 100
Notes to Financial Statements
Note 2 : Notes to financial statements
Dr. Reddy’s Laboratories International SA 202
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplusDeficitBalance at the beginning of the year (1,512) (616)Add: Current year Loss (932) (896)
Balance carried forward (2,444) (1,512)
2.3 : Other current liabilitiesAccrued expenses 490 9Sales and use tax payable 164 -Other current liabilities - 107
654 116
2.4 : Short term provisionsIncome tax payable 195 32
195 32
Dr. R
eddy’s Laboratories International SA
203
Notes to F
inancial Statem
ents2.5 : Fixed assets (All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Gross Block Depreciation Net Block
Description As at Additions Deletions Forex As at As at For the Deletions Forex As at As at As at01.04.2012 31.03.2013 01.04.2012 Year 31.03.2013 31.03.2013 31.03.2012
Plant & Machinery - 44,105 - - 44,105 - 2,035 - - 2,035 42,070 -
Total Tangible Assets - 44,105 - - 44,105 - 2,035 - - 2,035 42,070 -
Previous year - - - - - - - - - - -
Note 2 : Notes to financial statements (Continued)
Dr. Reddy’s Laboratories International SA 204
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.6 : Non current investmentInvestment in subsidiaries 225,299 225,299
225,299 225,299
2.7 : Long term loans and advances(Unsecured)Considered goodCapital advances for purchase of fixed assets - 15,057
- 15,057
2.8 : Cash and bank balancesCash on hand - -Bank balances In current accounts 6,103 3,462
6,103 3,462
2.9 : Short term loans and advances(Unsecured)Considered goodBalances with Statutory Agencies 53 151
53 151
Dr. Reddy’s Laboratories International SA 205
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the year ended For the year endedParticulars 31 March 2013 31 March 2012
2.10 : Other incomeInterest income 2 17Foreign exchange gain, net 862 2,646
864 2,663
2.11 : Employee benefits expenseSalaries, wages and bonus - 619
- 619
2.12 : Other expenseLegal and professional 832 843Rates and taxes 296 1,941Bank charges 57 67Auditor's remuneration Audit fees 360 9Miscellaneous 138 -
1,683 2,860
2.13 Commitments and contingent liabilities
There were no Commitments / contingent liabilities as at 31 March 2013 (Previous year ̀ 22,550).
2.14 Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.15 The Company incorporated in the Switzerland, is a 100% subsidiary of Dr. Reddy’s LaboratoriesSA.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G.V. PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Dr. Reddy’s Bio- Sciences Limited 206
Dear Members,
Your Directors present the 13th Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
(` in Lakhs)
Particulars 31 March 2013 31 March 2012
Loss for the period (792) (157)Balance Brought forward (154,269) (154,112)Balance Carried forward to Balance Sheet (155,061) (154,269)
Operations
The Company did not have any operation during the year.
Dividend
Your Directors do not recommend any dividend for the financial year ending 31 March 2013.
Share capital
During the year under review, there was no change in the share capital of the Company.
Directors Responsibility statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the company at the end of the financial year 2012-13 and of net loss of the companyfor that period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Audit Committee
The Audit Committee consists of Mr. G.V. Prasad, Mr. Satish Reddy and Mr. A S Kumar as membersof the Committee. The Audit Committee met 2 times during the year: on 9 May 2012, 26 October2012.
The functions of the Audit Committee are:
a) Hold discussions with the auditors periodically about internal control systems and the scope ofaudit including observations of the auditors.
DIRECTORS’ REPORT
Dr. Reddy’s Bio- Sciences Limited 207
b) Review of the half-yearly and annual financial statements before submission to the Board and
c) Ensure the compliance of internal control systems in the Company
Directors
Mr. G V Prasad, retires by rotation at the ensuing Annual General Meeting scheduled on 29 July 2013and being eligible seeks re-appointment. Your Directors recommends his re-appointment for yourapproval at the ensuing AGM.
Auditors
The Statutory Auditors of the Company M/s. A. Ramachandra Rao & Co., Chartered Accountants,retire at the ensuing Annual General Meeting and have confirmed their eligibility and willingness toaccept office of auditors, if re-appointed. The Board of Directors recommend re-appointment of M/s.A. Ramachandra Rao & Co., Chartered Accountants as Statutory Auditors of the Company for thefinancial year 2013-14 for shareholder’s approval.
Particulars of Employees
There are no employees who are drawing salary more than the amount as specified under the provisionsof Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees)Rules, 1975 as amended from time to time. Hence the relevant provisions are not applicable to yourCompany.
Conservation of energy, research and developments, technology absorption, foreign exchangeearnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgements
Your Directors place on record their sincere appreciation for support and co-operation extended by allthe concerned to the Company during the year.
for and on behalf of the Board of Directors
Place : Hyderabad G V Prasad Satish ReddyDate : 10 May 2013 Director Director
Dr. Reddy’s Bio- Sciences Limited 208
AUDITORS’ REPORT
ToThe Members ofDr. Reddy’s Bio–Sciences Limited.Hyderabad.
We have audited the accompanying financial statements of Dr.Reddy’s Bio-Sciences Ltd whichcomprise the Balance Sheet as at 31 March 2013, and the Statement of Profit and Loss and CashFlow Statement for the year then ended, and a summary of significant accounting policies and otherexplanatory information.
Management is responsible for the preparation of these financial statements that give a true and fairview of the financial position, financial performance and cash flows of the Company in accordancewith the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act,1956. This responsibility includes the design, implementation and maintenance of internal controlrelevant to the preparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with the Standards on Auditing issued by the Institute of CharteredAccountants of India. Those Standards require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether the financial statements are freefrom material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made by management,as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion.
01. In our opinion and to the best of our information and according to the explanations given to us,the financial statements give the information required by the Act in the manner so required andgive a true and fair view in conformity with the accounting principles generally accepted inIndia:
a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March2013;
b) in the case of the Profit and Loss Account, of the loss for the year ended on that date;and
c) in the case of the Cash Flow Statement, of the cash flows for the year ended on thatdate.
02. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Governmentof India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure astatement on the matters specified in paragraphs 4 and 5 of the Order.
Dr. Reddy’s Bio- Sciences Limited 209
03. As required by section 227(3) of the Act, we report that:
a) we have obtained all the information and explanations which to the best of our knowledgeand belief were necessary for the purpose of our audit;
b) in our opinion proper books of account as required by law have been kept by the Companyso far as appears from our examination of those books
c) the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt withby this Report are in agreement with the books of account.
d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statementcomply with the Accounting Standards referred to in subsection (3C) of section 211 ofthe Companies Act, 1956;
e) on the basis of written representations received from the directors as on 31 March 2013,and taken on record by the Board of Directors, none of the directors is disqualified as on31 March 2013, from being appointed as a director in terms of clause (g) of sub-section(1) of section 274 of the Companies Act, 1956.
f) Since the Central Government has not issued any notification as to the rate at which thecess is to be paid under section 441A of the Companies Act, 1956 nor has it issued anyRules under the said section, prescribing the manner in which such cess is to be paid, nocess is due and payable by the Company.
For A.Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A.Ramachandra RaoPlace : Hyderabad PartnerDate : 10 May 2013 Membership No: 9750
Dr. Reddy’s Bio- Sciences Limited 210
ANNEXURE TO THE AUDITORS’ REPORT(Of even date referred to in Para (2) of our Report)
i. (a) The Company is maintaining proper records to show full particulars ,including quantitativedetails and situation of fixed assets.
(b) The company has regular program of physical verification of its fixed assets which, in ouropinion, is reasonable having regard to the size of the Company and nature of its assets.
(c) During the year under report, the company has not disposed off any major part of thePlant and machinery and hence clause 4(i) (c) is not applicable.
ii. (a) The Company does not have any inventories and as such verification of stocks does notarise.In view of this the clauses 4(ii)(b) and 4(ii)(c) are not applicable to the company
iii. (a) the company has not granted or taken any loans, secured or unsecured, to companies,firms or other parties covered in the register maintained u/s 301 of the Act during theyear.
(b) In view of the above, the sub-clauses4(iii) (b), 4(iii)(c), and 4(iii)(d), are not applicable tothe company.
iv. In our opinion and according to the information and explanations given to us, there is an adequateinternal control procedures commensurate with the size of the Company and the nature of itsbusiness for the purchase of inventory and fixed assets.The Company does not have anypurchase of inventory and also for the sale of goods . During the course of our audit, we havenot observed any continuing failure to correct major weaknesses in internal control system.
v. (a) In our opinion, and according to the information and explanations given to us, thetransactions that need to be entered in the register maintained under section 301 of theCompanies act 1956 have been so entered .
(b) In our opinion and according to the information and explanations given to us, thetransactions made in pursuance of contracts or arrangements entered in the registermaintained under Section 301 of the Companies act.1956 and exceeding the value ofRupees Five lacs in respect of any party during the year have been made at prices whichare reasonable having regard to prevailing market prices at the relevant time.
vi. Based on the information provided to us, in our opinion, the Company has not accepted anyDeposits from the public during the year and hence, in our opinion, the Clause 4(vi) is notapplicable to the company for the year;
vii. In our opinion, the company has an internal audit system to commensurate with its size andnature of its business.
viii. We are of the opinion, based on the information provided to us, the maintenance of cost recordshas not been prescribed by the Central Government under section 209(1) (d) of the Companiesact ,1956 to the company.
ix. (a) According to the records of the company, the company is regular in depositing theundisputed statutory dues including Sales tax, Income-tax, Customs duty, Excise dutyand Employees State Insurance and Provident Fund and cess, investor education fundwith the appropriate authorities. We have been informed that the provision of providentfund, Investor Education protection fund, Employees State insurance ,sales tax ,customduty and Excise duty are not applicable to the company.
(b) According to the information and explanations given to us, there are no dues of salestax/income tax/ customs duty/Wealth tax /excise duty/cess to be deposited on account
Dr. Reddy’s Bio- Sciences Limited 211
of any dispute;
(c) Further, since the Central government has till date not prescribed the amount of cesspayable under section 441A of the Companies act 1956,we are not in a position tocomment upon the regularity or otherwise of the company in depositing the same.
x. In our opinion the accumulated losses of the company are less than fifty percent of its networth Further the Company has incurred cash losses during the financial year covered by ouraudit and in the immediately preceding financial year.
xi. Based on the information provided and explanation given to us, the company has no dues to aFinancial institution or bank or debenture holders.
xii. In our opinion and according to the information and explanation given to us, no loans andadvances have been granted by the company on the basis of security by way of pledge ofshares, debentures and other securities.
xiii. In our opinion, the Company is not a Chit fund or Nidhi / Mutual Benefit Fund / Society andhence clause 4(xiii) of the Companies (Auditor’s Report) Order 2003 is not applicable to theCompany.
xiv. Based on the information given to us, the Company has not dealt or traded in shares, securities,debentures or other investments during the year.
xv. Based on the information provided to us, the Company has not given guarantees for loanstaken by others from Banks or Financial Institutions.
xvi. According to the information and explanations given to us, the company has not obtained anyterm loans during the year and hence clause 4(xvi) of the order is not applicable to the company.
xvii. According to the information and explanations given to us, and on an overall examination of theBalance Sheet of the Company, we are of the opinion that the funds raised on short term basishave not been used for long term investment;
xviii. Based on the information provided and explanations offered, during the year, the Companyhas not made any preferential allotment of shares to parties and companies covered in theregister maintained u/s 301 of the Companies Act 1956 and hence sub clause (xvii) of the orderis not applicable to the company for the year.
xix. The Company has not issued any debentures and not created any securities or charges inrespect of any debentures.
xx. The Company has not raised any money by way of Public Issue during the year.
xxi. In our opinion and according to the information provided and explanations offered to us, nofraud on or by the Company has been noticed or reported during the year.
For A.Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A.Ramachandra RaoPlace : Hyderabad PartnerDate : 10 May 2013 Membership No: 9750
Dr. Reddy’s Bio- Sciences Limited 212
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 340,221 340,221Reserves and surplus 2.2 (155,061) (154,269)
185,160 185,952
Current liablitiesOther current liabilities 2.3 83,040 82,660
83,040 82,660
TOTAL 268,200 268,612ASSETSNon current assetsFixed assets Tangible assets 2.4 267,895 261,783 Capital work-in-progress - 6,112
267,895 267,895Current assetsCash and bank balances 2.5 305 305Short-term loans and advances 2.6 - 412
305 717
TOTAL 268,200 268,612
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao G V Prasad Satish ReddyPartner Director DirectorMembership No. 9750
Place : Hyderabad Md. ShahnawazDate : 10 May 2013 Company Secretary
Balance Sheet
Dr. Reddy’s Bio- Sciences Limited 213
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeOther Income 2.7 20 -
20 -
ExpensesOther expenses 2.8 811 157
811 157
Loss before exceptional andextraordinary items and tax (792) (157)Exceptional items - -
Loss before extraordinary items and tax (792) (157)Extraordinary Items - -
Loss before tax (792) (157)Tax expense Current tax - - Deferred tax - -
Loss for the year (792) (157)
Earnings per share 2.9Basic - Par value ` 10 per share (0.023) (0.005)Diluted - Par value ` 10 per share (0.023) (0.005)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao G V Prasad Satish ReddyPartner Director DirectorMembership No. 9750
Place : Hyderabad Md. ShahnawazDate : 10 May 2013 Company Secretary
Statement of Profit and Loss
Dr. Reddy’s Bio- Sciences Limited 214
Cash Flow Statement
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars year ended year ended
31 March 2013 31 March 2012
Cash flow from operating activitiesLoss for the year (792) (157)Adjustments:Advance tax written off 412 -
Operating loss before working capital changes (380) (157)
Increase in Other Current Liabilities 380 157
Cash generated from Operations - -Less: income tax paid - -
Net cash provided by operating activities - -
Cash flows From/(Used In) investing activities - -
Cash flows From/(Used In) financing activites - -
Net increase/(decrease) in cash & bank balances - -
Cash & bank balances at the beginning of the year 305 305
Cash & bank balances at the end of the year 305 305
As per our report even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao G V Prasad Satish ReddyPartner Director DirectorMembership No. 9750
Place : Hyderabad Md. ShahnawazDate : 10 May 2013 Company Secretary
Dr. Reddy’s Bio- Sciences Limited 215
Note 1: Significant Accounting Policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation
The financial statements have been prepared and presented in accordance with Indian GenerallyAccepted Accounting Principles (GAAP) under the historical cost convention on the accrualbasis. GAAP comprises accounting standards notified by the Central Government of Indiaunder section 211(3C) of Companies Act 1956, other pronouncements of Institute of CharteredAccountants of India, provisions of Companies Act 1956. The financial statements are roundedoff to the nearest thousands.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian RupeesThousands, for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Actual results could differ from these estimates.Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision toaccounting estimates is recognised prospectively in the current and future periods.
c) Fixed assets, depreciation and amortisation
Fixed assets are carried at the cost of acquisition or construction less accumulated depreciation.The cost of fixed assets includes non-refundable taxes, duties, freight and other incidentalexpenses related to the acquisition and installation of the respective assets. Borrowing costsdirectly attributable to acquisition or construction of those fixed assets which necessarily take asubstantial period of time to get ready for their intended use are capitalised.
Land is not depreciated. Depreciation on other fixed assets is provided using the straight-linemethod at the rates specified in Schedule XIV to the companies Act, 1956 or based on theuseful life of the assets as estimated by Management whichever is higher. Depreciation iscalculated on a pro-rata basis from the date of installation till the date the assets are sold ordisposed off. Individual assets costing less than ` 5,000 are depreciated in full in the year ofacquisition.
d) Income-tax expense
Income tax expense comprises current tax and deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and thecorresponding deferred tax liabilities or assets are recognised using the tax rates that havebeen enacted or substantially enacted by the balance sheet date. Deferred tax assets arerecognised only to the extent there is reasonable certainty that the assets can be realised in
Notes to Financial Statements
Dr. Reddy’s Bio- Sciences Limited 216
future; however, where there is unabsorbed depreciation or carry forward of losses, deferredtax assets are recognised only if there is a virtual certainty of realisation of such assets.
Deferred tax assets are reviewed at each balance sheet date and are written-down or written-up to reflect the amount that is reasonably/virtually certain (as the case may be) to be realised.The break-up of the major components of the deferred tax assets and liabilities as at balancesheet date has been arrived at after setting off deferred tax assets and liabilities where theCompany has a legally enforceable right to set-off assets against liabilities and where suchassets and liabilities relate to taxes on income levied by the same governing taxation laws.
e) Earnings per share
The basic earnings per share (“EPS”) is computed by dividing the net profit after tax for the yearby the weighted average number of equity shares outstanding during the year. For the purposeof calculating diluted earnings per share, net profit after tax for the year and the weightedaverage number of shares outstanding during the year are adjusted for the effects of all dilutivepotential equity shares. The dilutive potential equity shares are deemed converted as of thebeginning of the period, unless they have been issued at a later date. The diluted potentialequity shares have been adjusted for the proceeds receivable had the shares been actuallyissued at fair value (i.e. the average market value of the outstanding shares.
f) Provisions and contingent liabilities
The Company creates a provision when there is a present obligation as a result of a past eventthat probably requires an outflow of resources and a reliable estimate can be made of theamount of the obligation. A disclosure for a contingent liability is made when there is a possibleobligation or a present obligation that may, but probably will not, require an outflow of resources.Where there is possible obligation or a present obligation in respect of which the likelihood ofoutflow of resources is remote, no provision or disclosure is made.
g) Investments
Non-current investments are carried at cost less any other-than-temporary diminution in value,determined separately for each individual investment. The reduction in the carrying amount isreversed when there is a rise in the value of the investment or if the reasons for the reductionno longer exist.
Current investments are carried at the lower of cost and fair value. The comparison of cost andfair value is done separately in respect of each category of investment.
h) Revenue recognition
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
Service income is recognised as per the terms of contracts with customers when the relatedservices are performed, or the agreed milestones are achieved.
Notes to Financial Statements
Note 1: Significant Accounting Policies (continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Dr. Reddy’s Bio- Sciences Limited 217
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised35,000,000 (previous year 35,000,000) 350,000 350,000Equity shares of ` 10/- each
Issued, Subscribed and Paid up34,022,070 (previous year 34,022,070)Equity Shares of ` 10/- each 340,221 340,221
340,221 340,221
(a) Reconciliation of the shares outstanding at the beginning and at the end of reportingperiod
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
shares shares
Number of shares at thebeginning of the period 34,022,070 340,221 34,022,070 340,221Issued during the period - - - -
Outstanding at the end of the period 34,022,070 340,221 34,022,070 340,221
(b) Terms/rights attached to shares
The company has only one class of equity share having a par value of ` 10/- per share . Eachholder of equity share is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars No. of % holding No. of % holding
shares in the class shares in the class
Dr Reddy’s laboratories Ltd 34,022,010 99.99 34,022,010 99.99
Notes to Financial Statements
Note 2 : Notes to financial statements
Dr. Reddy’s Bio- Sciences Limited 218
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars As at As at31 March 2013 31 March 2012
2.2 : Reserves and surplusDeficitBalance in profit and loss account brought forward (154,269) (154,112)Add: Transfer from General Reserve - -
(154,269) (154,112)Add: Current Year Profit/(Loss) (792) (157)
Balance Carried Forward (155,061) (154,269)
2.3 : Other Current liabilitiesPayable to holding company 69,010 69,010Outstanding Liabilities 14,030 13,650
83,040 82,660
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Dr. R
eddy’s Bio- S
ciences Limited
219
2.4 : Fixed assets (All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Gross Block Depreciation / Amortization Net Block
Description As at Additions Deletions As at As at For the Deletions As at As at As at01.04.2012 31.03.2013 01.04.12 year 31.03.2013 31.03.2013 31.03.2012
Tangible AssetsLand 261,783 - - 261,783 - - - - 261,783 261,783Buildings & - 6,112 - 6,112 - - - - 6,112 -Ancillary structures
Total TangibleAssets 261,783 6,112 - 267,895 - - - - 267,895 261,783
Previous year 261,783 - - 261,783 - - - - 261,783
Notes to F
inancial Statem
ents
Note 2 : Notes to financial statements (Continued)
Dr. Reddy’s Bio- Sciences Limited 220
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
ParticularsAs at As at
31 March 2013 31 March 2012
2.5: Cash and Bank BalancesCash on hand - -Bank balances In current accounts 305 305
305 305
2.6: Short-term loans and advancesAdvance tax - 412
- 412
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.7: Other IncomeExcess Liability Written Back 20 -
20 -
2.8 : Other expensesRates & Taxes - 3Auditors Remuneration 11 11Electricity Expenses 391 -General Expenses 409 143
811 157
2.9 : Earnings per shareLoss for the year (792) (157)
Shares:Weighted average number of equity sharesoutstanding during the year - Basic 34,022,070 34,022,070Weighted average number of equity sharesoutstanding during the year - Diluted 34,022,070 34,022,070
Basic Earnings / (Loss) in ` per share (0.023) (0.005)Diluted Earnings / (Loss) in ` per share (0.023) (0.005)
Dr. Reddy’s Bio- Sciences Limited 221
2.10 Related Party Disclosures :
The company has the following amount due to / from related parties :
As at As atParticulars 31 March 2013 31 March 2012
Due to related parties(included in other current liabilties)Dr. Reddy’s Laboratories Ltd. 69,010 69,010
2.11: Claims against the Company not acknowledged as debts - Nil (previous year Nil).
2.12: Comparitive Figures
Previous year’s figures have been regrouped / reclassified wherever necessary, to conform tocurrent year presentation.
As per our report even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao G V Prasad Satish ReddyPartner Director DirectorMembership No. 9750
Place : Hyderabad Md. ShahnawazDate : 10 May 2013 Company Secretary
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Dr. Reddy’s Laboratories, LLC Ukraine 222
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Lakhs)
Particulars 31 March 2013 31 March 2012
Loss for the period after taxation (823) (3)Balance brought forward (3) -Balance carried forward to Balance Sheet (826) (3)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of this Act for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place: Hyderabad M Raja Sarath ChandraDate: 10 May 2013 Director
DIRECTORS’ REPORT
Dr. Reddy’s Laboratories, LLC Ukraine 223
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Dr. Reddy's Laboratories, LLC Ukraine acompany incorporated and administered outside India, which comprise the Balance Sheet as at 31March 2013, and the Statement of Profit and Loss for the year ended, and a summary of significantaccounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicable andrelevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carried outfor the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by management, as well as evaluating the overall presentation of thefinancial statements. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013; and
(b) in the case of the Statement of Profit and Loss, of the Loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
b. in our opinion proper books of account as required by law have been kept by the Company so faras appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
Dr. Reddy’s Laboratories, LLC Ukraine 224
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreement withthe books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to the extentapplicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Dr. Reddy’s Laboratories, LLC Ukraine 225
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 709 709Reserves and surplus 2.2 (826) (3)
(117) 706Current liabilitiesTrade payables 2.3 11,711 602Other current liabilities 2.4 558 6Short term provisions 2.5 14 -
12,283 608
TOTAL 12,166 1,314
ASSETSNon current assetsFixed assets Tangible assets 2.6 6 3 Intangible assets 2.6 4 -Deferred tax assets, net 174 13
184 16Current assetsInventories 2.7 6,348 602Trade receivables 2.8 4,960 -Cash and bank balances 2.9 638 694Short term loans and advances 2.10 36 2
11,982 1,298
TOTAL 12,166 1,314
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao M Raja Sarath ChandraPartner DirectorMembership No. 9750Place : HyderabadDate : 10 May 2013
Balance Sheet
Dr. Reddy’s Laboratories, LLC Ukraine 226
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeSales, net 11,283 -Other income 2.11 8 48
Total revenue 11,291 48
ExpensesPurchase of stock-in-trade (traded goods) 17,090 602Changes in inventories of finished goods,work-in-progress and Stock-in-trade 2.12 (5,740) (602)Employee benefits expense 2.13 250 52Depreciation and amortization expense 2.6 4 1Other expenses 2.14 641 11
Total expenses 12,245 64
Profit / (Loss) before tax (954) (16)Tax expense Current tax 30 - Deferred tax (161) (13)
Profit / (Loss) for the year (823) (3)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao M Raja Sarath ChandraPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Dr. Reddy’s Laboratories, LLC Ukraine 227
Note 1: Significant accounting policies(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) of CompaniesAct 1956, other pronouncements of Institute of Chartered Accountants of India and provisions ofCompanies Act 1956.
The financial statements have been prepared based on books, records and other returns maintainedby the subsidiary. The financial statements have been presented in Indian Rupees, for thelimited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation of usefullife of tangible and intangible assets, assessment of recoverable amounts of deferred tax assets,provision for obligations relating to employees, provisions against litigations and impairment ofassets. Actual results could differ from these estimates. Estimates and underlying assumptionsare reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectivelyin the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
Notes to Financial Statements
Dr. Reddy’s Laboratories, LLC Ukraine 228
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability for atleast 12 months after the reporting date. Terms of a liability that could, at the option of thecounterparty, result in its settlement by the issue of equity instruments do not affect itsclassification.
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value (NRV) isthe estimated selling price in the ordinary course of the business, less the estimated costs ofcompletion and the estimated costs necessary to make the sale. Cost of inventories comprisesall cost of purchase, cost of conversion and other costs incurred in bringing the inventories totheir present location and condition.
The cost of all categories of inventory is determined using weighted average cost method.
e) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intended use,as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of fixed assets are givenbelow:
YearsComputer equipment 3
f) Intangible assets and amortization
Intangible assets are recorded at the consideration paid for acquisition including any importduties and other taxes (other than those subsequently recoverable by the enterprise from thetaxing authorities), and any directly attributable expenditure on making the asset ready for itsintended use.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Dr. Reddy’s Laboratories, LLC Ukraine 229
Intangible assets are amortised on a systematic basis over the best estimate of their usefullives, commencing from the date the asset is available to the Company for its use.
The management’s estimates of the useful lives for various categories of intangible assets areas follows:
YearsSoftware 3
g) Retirement benefits
Contributions payable to employees, pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
h) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
i) Income-tax expense
Income tax expense comprises current tax and deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and the correspondingdeferred tax liabilities or assets are recognised using the tax rates that have been enacted orsubstantially enacted by the balance sheet date. Deferred tax assets are recognised only to theextent there is reasonable certainty that the assets can be realised in future; however, wherethere is unabsorbed depreciation or carry forward of losses, deferred tax assets are recognisedonly if there is a virtual certainty of realisations of such assets. Deferred tax assets are reviewedas at each balance sheet date and written-down or written-up to reflect the amount that is reasonably/ virtually certain (as the case may be) to be realised.
Deferred tax assets and liabilities are offset where the Company has a legally enforceable right toset-off assets against liabilities representing current tax, and where such assets and liabilitiesrelate to taxes on income levied by the same governing taxation laws.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Dr. Reddy’s Laboratories, LLC Ukraine 230
j) Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on the timeproportionate method.
k) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of past eventsand it is probable that an outflow of resources embodying economic benefits will be required tosettle the obligation. Provisions are recognised at the best estimate of the expenditure requiredto settle the present obligation at the balance sheet date. Provisions are measured on anundiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certain thatan inflow of economic benefits will arise, the asset and related income are recognised in theperiod in which the change occurs.
l) Revenue recognition
Sale of goods
Revenue is recognized when the significant risks and rewards of ownership have been transferredto the buyer, recovery of the consideration is probable, the associated costs and possible returnof goods can be estimated reliably, there is no continuing management involvement with thegoods and the amount of revenue can be measured reliably. Revenue from the sale of goods ismeasured at the fair value of the consideration received or receivable, net of returns, sales taxand applicable trade discounts and allowances. Revenue includes shipping and handling costsbilled to the customer.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Dr. Reddy’s Laboratories, LLC Ukraine 231
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorisedUAH 11,967,724 (previous year 11,967,724)* 709 709
IssuedUAH 11,967,724 (previous year 11,967,724)* 709 709
Subscribed and paid-upUAH 11,967,724 (previous year 11,967,724)* 709 709
709 709* No concept of nature and number of shares in this company
2.2 : Reserves and surplusDeficitBalance at the beginning of the year (3) -Add: Current year loss (823) (3)
(826) (3)
2.3 : Trade PayablesPayable to holding company and other group companies 9,971 602Payables to others 1,740 -
11,711 602
2.4 : Other current liabilitiesAccrued expenses 515 3Other current liabilities 43 3
558 6
2.5 : Short term provisionsProvision for employee benefits 10 -Income tax payable 4 -
14 -
Notes to Financial Statements
Note 2 : Notes to financial statements
Dr. R
eddy’s Laboratories, LLC U
kraine232
Notes to F
inancial Statem
ents
2.6 : Fixed assets (All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Gross Block Depreciation / Amortisation Net BlockDescription
As at Addi- Dele- Forex As at As at For the Deletions Forex As at As at As at01.04.2012 tions tions 31.03.2013 01.04.2012 Year 31.03.2013 31.03.2013 31.03.2012
Computers 4 7 1 - 10 1 4 1 - 4 6 3
Total TangibleAssets (A) 4 7 1 - 10 1 4 1 - 4 6 3
Softwares - 4 - - 4 - - - - - 4 -
Total IntangibleAssets (B) - 4 - - 4 - - - - - 4 -
TOTAL (A+B) 4 11 1 - 14 1 4 1 - 4 10 3
Previous year - 4 - - 4 - 1 - - 1 3
Note 2 : Notes to financial statements (Continued)
Dr. Reddy’s Laboratories, LLC Ukraine 233
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.7 : Inventories(Valued on weighted average basis)Stock-in-trade 6,342 602Packing materials 6 -
6,348 6022.8 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months - -Other debts Considered good 4,960 -
4,960 -Less: Provision for doubtful debts - -
4,960 -
2.9 : Cash and bank balancesCash on hand - -Bank balances In current accounts 638 694
638 694
2.10 : Short term loans and advances(Unsecured)Considered goodAdvances to material suppliers 32 1Staff loans and advances 1 -Prepaid expenses 3 1
36 2
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Dr. Reddy’s Laboratories, LLC Ukraine 234
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
For the year ended For the year endedParticulars 31 March 2013 31 March 2012
2.11 : Other incomeInterest income 8 -Foreign exchange gain, net - 48
8 48
2.12 : Changes in inventories of finished goods,work in progress and stock in tradeNet (increase) / decrease in stock
OpeningStock-in-trade 602 -
ClosingStock-in-trade 6,342 602
Net (increase) (5,740) (602)
2.13 : Employee benefits expenseSalaries, wages and bonus 198 34Contribution to provident and other funds 45 12Staff welfare expenses 7 6
250 52
2.14 : Other expenseLegal and professional 67 3Rates and taxes 13 -Other selling expenses 31 -Travelling and conveyance 7 2Communication 3 -Rent 51 4Insurance 4 -Foreign exchange loss, net 207 -Bank charges 11 1Miscellaneous 247 1
641 11
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Dr. Reddy’s Laboratories, LLC Ukraine 235
2.15: Commitments and contingent liabilities
There were no commitments or contingent liabilities as on 31 March 2013 (previous year: Nil).
2.16: Deferred taxation
Deferred tax assets, net included in the balance sheet comprises the following:
Particulars As at As at31 March 2013 31 March 2012
Deferred Tax Assets / (liabilities)
Loss carry forward - 13Provisions 108 -Inventories 66 -
Deferred tax asset, net 174 13
2.17: Related Party Disclosures:
The company has the following amount due to/from related parties :
Particulars As at As at31 March 2013 31 March 2012
i. Due to related parties (included in Trade payables)Dr. Reddy’s Laboratories Ltd. 9,675 44Dr Reddy’s Laboratories SA 296 558
2.18: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.19: The Company, incorporated in Ukraine, is a 100% subsidiary of Dr. Reddy’s Laboratories SA.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao M Raja Sarath ChandraPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Dr. Reddy's Laboratories New York, Inc. 236
DIRECTORS’ REPORT
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012
Loss for the period after taxation (420,192) (195,425)Balance brought forward (195,425) -Balance carried forward to Balance Sheet (615,617) (195,425)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followed alongwith proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company for thatperiod;
3. We have taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of this Act for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place : Hyderabad Satish Reddy G.V. PrasadDate : 10 May 2013 Director Director
Dr. Reddy's Laboratories New York, Inc. 237
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Dr. Reddy’s Laboratories New York,Inc ., a company incorporated and administered outside India, which comprise the Balance Sheet as at31 March 2013, and the Statement of Profit and Loss for the year ended, and a summary of significantaccounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicable andrelevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carried outfor the limited purpose of complying with sec. 212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by management, as well as evaluating the overall presentation of thefinancial statements. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013; and
(b) in the case of the Statement of Profit and Loss, of the Loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
b. in our opinion proper books of account as required by law have been kept by the Company so far
AUDITORS’ REPORT
Dr. Reddy's Laboratories New York, Inc. 238
as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreement withthe books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to the extentapplicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Dr. Reddy's Laboratories New York, Inc. 239
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 130 23Reserves and surplus 2.2 726,274 55,518
726,404 55,541Non current liabilitiesLong term borrowings 2.3 - 309,027
- 309,027Current liabilitiesTrade payables 2.4 15,149 3,427Other current liabilities 2.5 664,665 400,990Short term provisions 2.6 96 90
679,910 404,507
TOTAL 1,406,314 769,075
ASSETSNon current assetsFixed assets Tangible assets 2.7 110,327 116,211 Intangible assets 2.7 111,963 117,648 Capital work-in-progress 927,462 167,618Long term loans and advances 2.8 1,761 101
1,151,513 401,578Current assetsInventories 2.9 187,858 271,601Cash and bank balances 2.10 29,733 36,694Short term loans and advances 2.11 37,210 59,202
254,801 367,497
TOTAL 1,406,314 769,075Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G.V. PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Dr. Reddy's Laboratories New York, Inc. 240
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeOther operating revenues 128 293,064
Revenue from operations 128 293,064
Other income 2.12 751 -
Total revenue 879 293,064
ExpensesCost of material consumed(including packing material consumed) 252,706 56,976Changes in inventories of finished goodsand work-in-progress 2.13 (107,434) (10,760)Employee benefits expense 2.14 88,305 42,534Finance costs 2.15 64 -Depreciation and amortization expense 2.7 27,792 27,040Other expenses 2.16 159,638 372,699
Total expenses 421,071 488,489
Profit / (Loss) before tax (420,192) (195,425)Tax expense Current tax - - Deferred tax - -
Profit / (Loss) for the year (420,192) (195,425)
Significant accounting policies 1
Notes to financial statements 2
The accompanying notes are an integral part of financial statements.As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G.V. PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Dr. Reddy's Laboratories New York, Inc. 241
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) of CompaniesAct 1956, other pronouncements of Institute of Chartered Accountants of India and provisions ofCompanies Act 1956.
The financial statements have been prepared based on books, records and other returns maintainedby the subsidiary. The financial statements have been presented in Indian Rupees, for thelimited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation of usefullife of tangible and intangible assets, assessment of recoverable amounts of deferred tax assets,provision for obligations relating to employees, provisions against litigations and impairment ofassets. Actual results could differ from these estimates. Estimates and underlying assumptionsare reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectivelyin the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability for atleast 12 months after the reporting date. Terms of a liability that could, at the option of thecounterparty, result in its settlement by the issue of equity instruments do not affect itsclassification.
Notes to Financial Statements
Dr. Reddy's Laboratories New York, Inc. 242
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value (NRV) isthe estimated selling price in the ordinary course of the business, less the estimated costs ofcompletion and the estimated costs necessary to make the sale. Cost of inventories comprisesall cost of purchase, cost of conversion and other costs incurred in bringing the inventories totheir present location and condition.
The cost of all categories of inventory is determined using weighted average cost method.
e) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intended use,as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of fixed assets are givenbelow:
YearsBuildings Factory and administrative buildings 20 to 50 Ancillary structures 3 to 15Plant and machinery 3 to 15Laboratory equipment 4 to 10Furniture, fixtures and office equipment (other than computer equipment) 3 to 5Computer equipment 3
f) Intangible assets and amortization
Intangible assets are recorded at the consideration paid for acquisition including any importduties and other taxes (other than those subsequently recoverable by the enterprise from thetaxing authorities), and any directly attributable expenditure on making the asset ready for itsintended use.
Intangible assets are amortised on a systematic basis over the best estimate of their usefullives, commencing from the date the asset is available to the Company for its use.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Notes to Financial Statements
Dr. Reddy's Laboratories New York, Inc. 243
The management’s estimates of the useful lives for various categories of intangible assets areas follows:
Years
Patents, trademarks, etc. (including marketing/ distribution rights) 10
g) Retirement benefits
Contributions payable to employees, pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
h) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
i) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of past eventsand it is probable that an outflow of resources embodying economic benefits will be required tosettle the obligation. Provisions are recognised at the best estimate of the expenditure requiredto settle the present obligation at the balance sheet date. Provisions are measured on anundiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certain thatan inflow of economic benefits will arise, the asset and related income are recognised in theperiod in which the change occurs.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Notes to Financial Statements
Dr. Reddy's Laboratories New York, Inc. 244
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised30,000 (previous year: 10,000) shares of USD 0.10 each 156 45
Issued25,000 (previous year: 5,000) shares of USD 0.10 each 130 23
Subscribed and paid-up25,000 (previous year: 5,000) shares of USD 0.10 each 130 23
130 23
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 5,000 23 - -Add: Share issued during the year 20,000 107 5,000 23
Number of shares outstandingat the end of the year 25,000 130 5,000 23
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of USD 0.10 per share.Each holder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
ParticularsAs at 31 March 2013 As at 31 March 2012
No. of Equity % equity No. of Equity % equityshares held shares held shares held shares held
Dr. Reddy’s Laboratories International SA 5,000 20 5,000 100
Dr Reddy’s Laboratories SA 20,000 80 - -
Notes to Financial Statements
Note 2 : Notes to financial statements
Dr. Reddy's Laboratories New York, Inc. 245
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year 25,666 -Additions / (deductions) during the year 12,755 25,666
38,421 25,666
Securities premium reserveBalance at the beginning of the year 225,277 -Additions / (deductions) during the year 1,078,193 225,277
1,303,470 225,277
DeficitBalance at the beginning of the year (195,425) -Add: Current year loss (420,192) (195,425)
Balance carried forward (615,617) (195,425)
726,274 55,518
2.3 : Long term borrowingsUnsecuredBorrowings from holding company and other group companies - 309,027
- 309,027
2.4 : Trade PayablesPayables to others 15,149 3,427
15,149 3,427
2.5 : Other current liabilitiesDue to capital creditors 2,321 11,123Due to holding company and other group companies 526,784 323,621Accrued expenses 40,181 -Other current liabilities 95,379 66,246
664,665 400,990
2.6 : Short term provisionsProvision for employee benefits 96 90
96 90
Dr. R
eddy's Laboratories New
York, Inc.
246
Notes to F
inancial Statem
ents
2.7 : Fixed assets (All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Description
Gross Block Depreciation / Amortisation Net Block
As at Additions Deletions Forex As at As at For the Year Deletions Forex As at As at As at
01.04.2012 31.03.2013 01.04.2012 31.03.2013 31.03.2013 31.03.2012
Building 74,429 - - 4,989 79,418 3,846 5,690 - 243 9,779 69,639 70,583
Plant & Machinery 58,419 - 2,211 3,915 60,123 13,725 8,113 2,211 919 20,546 39,577 44,694
Furniture, Fixtures 641 - - 43 684 105 155 - 7 267 417 536
Computers 539 426 - 35 1,000 141 159 - 6 306 694 398
Total Tangible Assets (A) 134,028 426 2,211 8,982 141,225 17,817 14,117 2,211 1,175 30,898 110,327 116,211
Intangibles 127,188 - - 8,525 135,713 9,540 13,675 - 535 23,750 111,963 117,648
Total Intangible Assets (B) 127,188 - - 8,525 135,713 9,540 13,675 - 535 23,750 111,963 117,648
TOTAL (A+B) 261,216 426 2,211 17,507 276,938 27,357 27,792 2,211 1,710 54,648 222,290 233,859
Previous year - 259,513 - 1,703 261,216 - 27,040 - 317 27,357 233,859
Note 2 : Notes to financial statements (Continued)
Dr. Reddy's Laboratories New York, Inc. 247
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.8 : Long term loans and advances(Unsecured)Considered goodCapital advances for purchase of fixed assets 1,355 -Security Deposits 406 101
1,761 101
2.9 : Inventories(Valued on weighted average basis)Raw materials 69,664 260,841Work-in-progress 118,194 -Finished goods - 10,760
187,858 271,601
2.10 : Cash and bank balancesCash on hand - -Bank balances In current accounts 29,733 36,694
29,733 36,694
2.11 : Short term loans and advances(Unsecured)Considered goodAdvances to material suppliers 9,539 -Advance tax, net of provision for income taxes 56 -Prepaid expenses 7,214 484Other Advances 20,401 58,718
37,210 59,202
Dr. Reddy's Laboratories New York, Inc. 248
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.12 : Other incomeProfit on sale of fixed assets, net 751 -
751 -
2.13 : Changes in inventories of finished goods,work in progress and stock in tradeNet (increase) / decrease in stockOpeningFinished goods 10,760 -
ClosingWork-in-process 118,194 -Finished goods - 10,760
Net (increase) / decrease in stock (107,434) (10,760)
2.14 : Employee benefits expenseSalaries, wages and bonus 71,684 40,041Contribution to provident and other funds 6,412 -Staff welfare expenses 10,209 2,493
88,305 42,534
2.15 : Finance costsInterest Expenses 64 -
64 -
Dr. Reddy's Laboratories New York, Inc. 249
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.16 : Other expenseLegal and professional 31,578 41,747Carriage outward 4,639 215Rates and taxes 2,354 1,417Repairs and maintenance Buildings 5,228 395 Plant and machinery 8,349 5,801 Others 70,835 954Power and fuel 3,704 1,082Travelling and conveyance 2,142 1,129Communication 950 406Rent 8,863 2,726Insurance 11,078 2,147Foreign exchange loss, net 12 -Printing and stationery 986 486Advance written off - 305,448Bank charges 1,568 77Miscellaneous 7,352 8,669
159,638 372,699
Dr. Reddy's Laboratories New York, Inc. 250
2.17: Commitments and contingent liabilities
There were no commitments or contingent liabilities as at 31 March 2013 (previous year – Nil).
2.18: Related Party Disclosures:
Particualrs As at As at31 March 2013 31 March 2012
i. Due to related parties(included in Borrowings and Other current liabilities)Dr. Reddy’s Laboratories Inc 526,784 632,648
2.19 : Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.20: The Company, incorporated in the USA, is a 80% subsidiary of Dr. Reddy’s Laboratories SAand the balance 20% is held by Dr. Reddy's Laboratories International SA.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G.V. PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Dr. Reddy’s Laboratories Romania SRL 251
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012
Profit for the period after taxation 23,502 15,829Balance brought forward 21,716 5,887Balance carried forward to Balance Sheet 45,218 21,716
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of profit of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Satish Reddy M. V. NarasimhamPlace : Hyderabad Director DirectorDate : 10 May 2013
DIRECTORS’ REPORT
Dr. Reddy’s Laboratories Romania SRL 252
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Dr. Reddy’s Laboratories RomaniaSRL., a company incorporated and administered outside India, which comprise the Balance Sheet asat 31 March 2013, and the Statement of Profit and Loss for the year ended, and a summary ofsignificant accounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act,1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the Profit for the year ended on that date;and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Dr. Reddy’s Laboratories Romania SRL 253
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Dr. Reddy’s Laboratories Romania SRL 254
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 23,743 23,743Reserves and surplus 2.2 45,218 21,716
68,961 45,459Current liablitiesOther current liabilities 2.3 36,358 31,481Short term provisions 2.4 1,202 2,445
37,560 33,926
TOTAL 106,521 79,385
ASSETSNon current assetsFixed assets Tangible assets 2.5 4,945 11,141Deferred tax assets, net 2.15 1,180 941Long term loans and advances 2.6 1,137 1,047
7,262 13,129Current assetsInventories 2.7 7 1,823Trade receivables 2.8 25,088 21,366Cash and bank balances 2.9 15,027 10,102Short term loans and advances 2.10 59,137 32,965
99,259 66,256
TOTAL 106,521 79,385
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy M. V. NarasimhamPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Dr. Reddy’s Laboratories Romania SRL 255
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeOther operating revenues 319,261 269,178
Revenue from operations 319,261 269,178Other income 2.11 3,257 218
Total revenue 322,518 269,396
ExpensesEmployee benefits expense 2.12 128,168 99,469Depreciation and amortization expense 2.5 8,116 11,536Other expenses 2.13 156,911 137,166
Total expenses 293,195 248,171
Profit before tax 29,323 21,225Tax expense Current tax 6,047 6,321 Deferred tax (226) (925)
Profit for the year 23,502 15,829
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy M. V. NarasimhamPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Dr. Reddy’s Laboratories Romania SRL 256
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act 1956, other pronouncements of Institute of Chartered Accountants of India andprovisions of Companies Act 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
Dr. Reddy’s Laboratories Romania SRL 257
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intendeduse, as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of fixed assets are givenbelow:
YearsFurniture, fixtures and office equipment (other than computer equipment) 3 to 5Computer equipment 3Vehicles 3 to 5
e) Retirement benefits
Contributions payable to employees, pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
f) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the profit and loss account.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date,not covered by forward exchange contracts, are translated at year-end rates. The resultantexchange differences are recognised in the profit and loss account. Non-monetary assets arerecorded at the rates prevailing on the date of the transaction.
g) Income-tax expense
Income tax expense comprises current tax and deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulations
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Notes to Financial Statements
Dr. Reddy’s Laboratories Romania SRL 258
applicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and thecorresponding deferred tax liabilities or assets are recognised using the tax rates that havebeen enacted or substantially enacted by the balance sheet date. Deferred tax assets arerecognised only to the extent there is reasonable certainty that the assets can be realised infuture; however, where there is unabsorbed depreciation or carry forward of losses, deferredtax assets are recognised only if there is a virtual certainty of realisations of such assets.
Deferred tax assets are reviewed as at each balance sheet date and written-down or written-upto reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.
Deferred tax assets and liabilities are offset where the Company has a legally enforceable rightto set-off assets against liabilities representing current tax, and where such assets and liabilitiesrelate to taxes on income levied by the same governing taxation laws.
h) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Notes to Financial Statements
Dr. Reddy’s Laboratories Romania SRL 259
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised170,000 (previous year 170,000) shares of RON 10 each 23,743 23,743
Issued170,000 (previous year 170,000) shares of RON 10 each 23,743 23,743
Subscribed and paid-up170,000 (previous year 170,000) shares of RON 10 each 23,743 23,743
23,743 23,743
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 170,000 23,743 170,000 23,743Add: Share issued during the year - - - -
Number of shares outstandingat the end of the year 170,000 23,743 170,000 23,743
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of RON 10 per share.Each holder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
ParticularsAs at 31 March 2013 As at 31 March 2012
No. of Equity % equity No. of Equity % equityshares held shares held shares held shares held
Dr. Reddy’s Laboratories SA 169,983 99.99 169,983 99.99
Notes to Financial Statements
Note 2 : Notes to financial statements
Dr. Reddy’s Laboratories Romania SRL 260
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplusSurplusBalance at the beginning of the year 21,716 5,887Add: Current year profit 23,502 15,829
Balance carried forward 45,218 21,716
2.3 : Other current liabilitiesPayable to holding company and group companies 22,400 22,012Accrued expenses 3,792 2,412Due to statutory authorities 3,092 2,649Other current liabilities 7,074 4,408
36,358 31,481
2.4 : Short term provisionsIncome tax payable 1,202 2,445
1,202 2,445
Dr. R
eddy’s Laboratories Rom
ania SR
L261
2.5 : Fixed assets (All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Gross Block Depreciation Net Block
Description As at Additions Deletions Forex As at As at For the Deletions Forex As at As at As at01.04.2012 31.03.2013 01.04.2012 Year 31.03.2013 31.03.2013 31.03.2012
Lease HoldImprovements 980 174 - - 1,154 344 263 - - 607 547 636
Vehicles 21,041 183 4,543 - 16,681 14,447 5,532 4,543 - 15,436 1,245 6,594
Office Equipment 98 - - - 98 - 31 - - 31 67 98
Furniture & Fixtures 417 - 164 - 253 52 198 164 - 86 167 365
Computers 4,396 1,566 638 - 5,324 948 2,092 635 - 2,405 2,919 3,448
TOTAL 26,932 1,923 5,345 - 23,510 15,791 8,116 5,342 - 18,565 4,945 11,141
Previous Year 23,515 4,048 631 - 26,932 4,538 11,536 283 - 15,791 11,141
Notes to F
inancial Statem
ents
Note 2 : Notes to financial statements (Continued)
Dr. Reddy’s Laboratories Romania SRL 262
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.6 : Long term loans and advances(Unsecured)Considered goodSecurity deposits 1,137 1,047
1,137 1,047
2.7 : Inventories(Valued on weighted average basis)Stores and spares 7 1,823
7 1,823
2.8 : Trade Receivables(Unsecured)Receivables from holding company and other group companies 25,088 21,366
25,088 21,366Less: Provision for doubtful debts - -
25,088 21,366
2.9 : Cash and bank balancesBank balances In current accounts 15,027 10,102
15,027 10,102
2.10 : Short term loans and advances(Unsecured)Considered goodAdvances to material suppliers 88 527Staff loans and advances 316 328Balances with Statutory Agencies 55,999 29,395Prepaid expenses 2,734 2,715
59,137 32,965
Dr. Reddy’s Laboratories Romania SRL 263
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.11 : Other incomeInterest income 286 -Profit on sale of fixed assets, net 1,894 -Foreign exchange gain, net 1,077 218
3,257 218
2.12 : Employee benefits expenseSalaries, wages and bonus 123,823 95,030Staff welfare expenses 4,345 4,439
128,168 99,469
2.13 : Other expenseLegal and professional 4,636 3,650Other selling expenses 96,482 80,697Travelling and conveyance 9,437 8,674Communication 4,258 3,245Rent 13,818 5,994Insurance 2,688 2,517Printing and stationery 407 305Bank charges 318 302Loss on sale of fixed assets, net - 43Auditors’ remuneration Audit fees 231 222Advertisements 649 1,986Miscellaneous 23,987 29,531
156,911 137,166
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Dr. Reddy’s Laboratories Romania SRL 264
2.14: Commitments and contingent liabilities
There were no commitments or contingent liabilities as at 31 March 2013 (previous year: Nil).
2.15 : Deferred taxation
Deferred tax asset, net included in the balance sheet comprises the following:
As at As atParticulars 31 March 2013 31 March 2012
Deferred Tax Assets / (liabilities)Current liabilities 1,180 941
Deferred tax asset, net 1,180 941
2.16: Related Party Disclosures:
The company has the following amount due to/from related parties :
As at As atParticulars 31 March 2013 31 March 2012
i. Due to related parties(included in other current liabilities)Dr. Reddy’s Laboratories Ltd. 22,400 22,102
ii. Due from related parties(included in Trade Receivables)Dr. Reddy’s Laboratories Ltd. 114 112Dr.Reddy’s Laboratories S.A 24,974 21,253
2.17: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.18: The Company incorporated in Romania, is a 100% subsidiary of Dr. Reddy’s Laboratories SA,Switzerland.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy M. V. NarasimhamPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Dr. Reddy’s Laboratories Tennessee, LLC 265
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Lakhs)
Particulars 31 March 2013 31 March 2012
Loss for the period after taxation (689) (2,110)Balance brought forward (2,428) (318)Balance carried forward to Balance Sheet (3,117) (2,428)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
G.V. Prasad Satish ReddyPlace : Hyderabad Director DirectorDate : 10 May 2013
DIRECTORS’ REPORT
Dr. Reddy’s Laboratories Tennessee, LLC 266
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Dr.Reddy’s LaboratoriesTennessee,LLC ., a company incorporated and administered outside India, which comprise the BalanceSheet as at March 31, 2013, and the Statement of Profit and Loss for the year ended, and a summaryof significant accounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act,1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the Loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Dr. Reddy’s Laboratories Tennessee, LLC 267
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Dr. Reddy’s Laboratories Tennessee, LLC 268
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 11,196 11,196Reserves and surplus 2.2 (836) (871)
10,360 10,325Current liablitiesTrade payables 2.3 1,662 516Other current liabilities 2.4 986 1,702Short term provisions 2.5 4 4
2,652 2,222
TOTAL 13,012 12,547
ASSETSNon current assetsFixed assets Tangible assets 2.6 6,018 6,265 Intangible assets 2.6 2,188 2,585 Capital work-in-progress 212 127
8,418 8,976Current assetsInventories 2.7 3,353 2,977Trade receivables 2.8 959 -Cash and bank balances 2.9 193 326Short term loans and advances 2.10 89 268
4,594 3,571
TOTAL 13,012 12,547
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao G.V. Prasad Satish ReddyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Dr. Reddy’s Laboratories Tennessee, LLC 269
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeSales, net 22,542 13,803Other operating revenue 453 279
Total revenue 22,995 14,082
ExpensesCost of material consumed(including packing material consumed) 12,497 6,126Changes in inventories of finished goods,work-in-progress and Stock-in-trade 2.11 605 410Employee benefits expense 2.12 5,159 3,770Depreciation and amortization expense 2.6 1,502 1,294Research and development 146 -Other expenses 2.13 3,775 4,592
Total expenses 23,684 16,193
Profit/(Loss) before tax (689) (2,110)Tax expense 2.16 Current tax - - Deferred tax - -
Profit/ (Loss) for the year (689) (2,110)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao G.V. Prasad Satish ReddyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Dr. Reddy’s Laboratories Tennessee, LLC 270
Note 1: Significant accounting policies(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act 1956, other pronouncements of Institute of Chartered Accountants of India andprovisions of Companies Act 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
Dr. Reddy’s Laboratories Tennessee, LLC 271
Current assets/ liabilities include the current portion of non current financial assets/liabilities repectively. All other assets/ liabilities are classified as non current.
d) Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value (NRV)is the estimated selling price in the ordinary course of the business, less the estimated costs ofcompletion and the estimated costs necessary to make the sale. Cost of inventories comprisesall cost of purchase, cost of conversion and other costs incurred in bringing the inventories totheir present location and condition.
The cost of all categories of inventory is determined using weighted average cost method.
e) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intendeduse, as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of fixed assets are givenbelow:
YearsBuildings Factory and administrative buildings 20 to 50 Ancillary structures 3 to 15Plant and machinery 3 to 15Laboratory equipment 4 to 10Furniture, fixtures and office equipment (other than computer) 3 to 5Computer equipment 3
f) Intangible assets and amortization
Intangible assets are recorded at the consideration paid for acquisition including any importduties and other taxes (other than those subsequently recoverable by the enterprise from thetaxing authorities), and any directly attributable expenditure on making the asset ready for itsintended use.
Intangible assets are amortised on a systematic basis over the best estimate of their usefullives, commencing from the date the asset is available to the Company for its use.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Dr. Reddy’s Laboratories Tennessee, LLC 272
The management’s estimates of the useful lives for various categories of intangible assets areas follows:
YearsPatents, trademarks, etc. (including marketing/ distribution rights) 5
g) Retirement benefits
Contributions payable to employees, pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
h) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the datesof the respective transactions. Exchange differences arising on foreign currency transactionssettled during the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
i) Income-tax expense
Income tax expense comprises current tax and deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and thecorresponding deferred tax liabilities or assets are recognised using the tax rates that havebeen enacted or substantially enacted by the balance sheet date. Deferred tax assets arerecognised only to the extent there is reasonable certainty that the assets can be realised infuture; however, where there is unabsorbed depreciation or carry forward of losses, deferredtax assets are recognised only if there is a virtual certainty of realisations of such assets.Deferred tax assets are reviewed as at each balance sheet date and written-down or written-upto reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.
j) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Dr. Reddy’s Laboratories Tennessee, LLC 273
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
k) Revenue recognition
Sale of goods
Revenue from sale of goods is recognised when significant risks and rewards in respect ofownership of products are transferred to customers. Revenue from product sales is statedexclusive of returns, sales tax and applicable trade discounts and allowances.
l) Research and development
Expenditures on research activities undertaken with the prospect of gaining new scientific ortechnical knowledge and understanding are recognized in the statement of profit and losswhen incurred.
Development activities involve a plan or design for the production of new or substantially improvedproducts and processes. Development expenditures are capitalized only if:
l Development costs can be measured reliably,
l The product or process is technically and commercially feasible,
l Future economic benefits are probable and ascertainable, and
l The Company intends to and has sufficient resources to complete development and hasthe ability to use or sell the asset.
Expenditure incurred on fixed assets used for research and development is capitalisedand depreciated in accordance with the depreciation policy of the Company.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Dr. Reddy’s Laboratories Tennessee, LLC 274
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorisedUSD 25,000,000 (previous year USD 25,000,000)* 11,196 11,196
IssuedUSD 25,000,000 (previous year USD 25,000,000)* 11,196 11,196
Subscribed and paid-upUSD 25,000,000 (previous year USD 25,000,000)* 11,196 11,196
11,196 11,196* No concept of nature and number of shares in this company
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year 1,557 (44)Additions / (deductions) during the year 724 1,601
2,281 1,557DeficitBalance at the beginning of the year (2,428) (318)Add: Current year loss (689) (2,110)
Balance carried forward (3,117) (2,428)
(836) (871)
2.3 : Trade PayablesPayable to others 1,662 516
1,662 516
2.4 : Other current liabilitiesDue to capital creditors 63 29Due to holding company and other group companies 11 768Accrued expenses 716 737Other current liabilities 196 168
986 1,7022.5 : Short term provisionsProvision for employee benefits 4 4
4 4
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Dr. R
eddy’s Laboratories Tennessee, LLC
275
2.6 : Fixed assets (All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Gross Block Depreciation / Amortisation Net Block
Description As at Addi- Deletions Forex As at As at For the Deletions Forex As at As at As at01.04.12 tions 31.03.13 01.04.12 Year 31.03.13 31.03.13 31.03.12
Land 563 - - 37 600 - - - - - 600 563
Building 4,280 147 - 294 4,721 241 277 - 33 552 4,169 4,038
Ancillary Structures 122 - 122 - - 17 - 17 - - - 105
Plant & Machinery 1,665 68 - 112 1,845 313 340 - 23 676 1,169 1,352
Electrical Equipment 7 - - - 7 4 3 - - 7 - 3
Lab Equipment 59 11 - 4 74 22 24 - 1 47 27 37
Office Equipment 105 10 - 10 125 36 67 - 7 110 15 68
Furniture & Fixtures 27 - - 7 34 16 17 - 1 34 - 12
Computers 166 - - 11 177 79 56 - 4 139 38 87
Total Tangible
Assets (A) 6,993 237 122 475 7,585 728 784 17 69 1,565 6,018 6,265
Intangibles 3,236 148 - 216 3,600 651 718 - 42 1,412 2,188 2,585
Total Intangible
Assets (B) 3,236 148 - 216 3,600 651 718 - 42 1,412 2,188 2,585
TOTAL (A+B) 10,229 384 122 691 11,183 1,379 1,502 17 112 2,976 8,206 8,850
Previous year 8,818 505 - 906 10,229 6 1,294 - 78 1,379 8,850
Notes to F
inancial Statem
ents
Note 2 : Notes to financial statements (Continued)
Dr. Reddy’s Laboratories Tennessee, LLC 276
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.7 : Inventories(Valued on weighted average basis)Raw materials 2,441 1,694Work-in-progress 220 603Finished goods 223 446Packing materials 469 234
3,353 2,977
2.8 : Trade Receivables(Unsecured)Receivables from holding company and other group companies 959 -
959 -Less: Provision for doubtful debts - -
959 -2.9 : Cash and bank balancesCash on hand - -Bank balances In current accounts 193 326
193 326
2.10 : Short term loans and advancesUnsecuredConsidered goodAdvances to material suppliers 2 233Prepaid expenses 87 16Other Advances - 19
89 268
Dr. Reddy’s Laboratories Tennessee, LLC 277
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
For the year ended For the year endedParticulars 31 March 2013 31 March 2012
2.11 : Changes in inventories of finished goods,work in progress and stock in tradeNet (increase) / decrease in stockOpening Work-in-process 603 1
Finished goods 446 1,048 1,458 1,459
Closing Work-in-process 220 603Finished goods 223 443 446 1,049
Net (increase) 605 410
2.12 : Employee benefits expenseSalaries, wages and bonus 4,300 3,422Contribution to provident and other funds 242 105Staff welfare expenses 617 243
5,159 3,770
2.13 : Other expenseConsumption of Stores and spare parts 550 119Legal and professional 373 124Carriage outward 50 27Rates and taxes 202 306Other selling expenses 1 -Repairs and maintenance Buildings 567 320 Plant and machinery 314 304 Others 637 539Power and fuel 742 654Travelling and conveyance 37 11Communication 41 1,822Insurance 143 113Foreign exchange loss, net - 3Printing and stationery 82 45Bank charges 2 -Advertisements 1 -Miscellaneous 33 205
3,775 4,592
Dr. Reddy’s Laboratories Tennessee, LLC 278
2.14: Commitments and contingent liabilities
The value of commitments / contingent liabilities as at 31 March 2013 is ` 332 (previous year:` 81).
2.15: Related Party Disclosures:
The company has the following amount due to/from related parties :
As at As atParticulars 31 March 2013 31 March 2012
i. Due to related parties(included in other current liabilities)Dr. Reddy’s Laboratories Inc - 768Dr. Reddy’s Laboratories Louisiana LLC 11 -
ii. Due from related parties(included in trade receivables)Dr. Reddy’s Laboratories Inc 959 -
2.16: The tax expense for the Company is computed and presented together with the parentCompany's (Dr. Reddy's Laboratories Inc.) financial as per the tax laws of United States.
2.17: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.18: The Company incorporated in USA, is a 100% subsidiary of Dr. Reddy’s Laboratories Inc.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao G.V. Prasad Satish ReddyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Dr. Reddy’s New Zealand Limited 279
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in thousands)
Particulars 31 March 2013 31 March 2012
Profit/ (Loss) for the period after taxation 8,682 (29,616)Balance brought forward (19,048) 10,568Balance carried forward to Balance Sheet (10,366) (19,048)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of profit of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of this Act for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating to con-servation of energy, technology absorption, foreign exchange earnings and outgo are not applicable toyour Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place: Hyderabad Satish Reddy Abhijit MukerjeeDate: 10 May 2013 Director Director
DIRECTORS’ REPORT
Dr. Reddy’s New Zealand Limited 280
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Dr. Reddy’s New Zealand Limited , acompany incorporated and administered outside India, which comprise the Balance Sheet as at 31March 2013, and the Statement of Profit and Loss for the year ended, and a summary of significantaccounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicable andrelevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carried outfor the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent appli-cable and relevant. Those Standards require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonable-ness of the accounting estimates made by management, as well as evaluating the overall presentationof the financial statements. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013; and
(b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
b. in our opinion proper books of account as required by law have been kept by the Company so faras appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
Dr. Reddy’s New Zealand Limited 281
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreement withthe books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to the extentapplicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Dr. Reddy’s New Zealand Limited 282
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 328 328Reserves and surplus 2.2 94,856 86,174
95,184 86,502
Current liabilitiesTrade payables 2.3 47,939 31,562Other current liabilities 2.4 1,411 2,829
49,350 34,391
TOTAL 144,534 120,893ASSETSNon current assetsFixed assets Tangible assets 2.5 151 245Deferred tax assets, net 2.15 507 389
658 634Current assetsInventories 2.6 40,175 34,345Trade receivables 2.7 11,972 48,387Cash and bank balances 2.8 88,217 35,904Short term loans and advances 2.9 3,512 1,624
143,876 120,260
TOTAL 144,534 120,893
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy Abhijit MukerjeePartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Dr. Reddy’s New Zealand Limited 283
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeSales, net 123,415 223,725Other income 2.10 5,695 470Total revenue 129,110 224,195
ExpensesPurchase of stock-in-trade (traded goods) 97,125 91,950Changes in inventories of finished goods,work-in-progress and Stock-in-trade 2.11 (5,830) 82,804Employee benefits expense 2.12 6,028 9,563Finance costs 2.13 - 127Depreciation and amortization expense 2.6 162 30,857Other expenses 2.14 23,869 37,756Total expenses 121,354 253,057
Profit / (Loss) before tax 7,756 (28,862)Tax expense Current tax (843) 1,138 Deferred tax (83) (384)Profit / (Loss) for the year 8,682 (29,616)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy Abhijit MukerjeePartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Dr. Reddy’s New Zealand Limited 284
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory Accounting Stan-dards (“AS”) notified by the Central Government of India under section 211(3C) of Companies Act1956, other pronouncements of Institute of Chartered Accountants of India and provisions ofCompanies Act 1956.
The financial statements have been prepared based on books, records and other returns main-tained by the subsidiary. The financial statements have been presented in Indian Rupees, forthe limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation of usefullife of tangible and intangible assets, assessment of recoverable amounts of deferred tax as-sets, provision for obligations relating to employees, provisions against litigations and impair-ment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates is recognisedprospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability for atleast 12 months after the reporting date. Terms of a liability that could, at the option of thecounterparty, result in its settlement by the issue of equity instruments do not affect itsclassification.
Notes to Financial Statements
Dr. Reddy’s New Zealand Limited 285
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intended use,as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of fixed assets are givenbelow:
YearsFurniture, fixtures and office equipment 3 to 5
e) Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value (NRV) isthe estimated selling price in the ordinary course of the business, less the estimated costs ofcompletion and the estimated costs necessary to make the sale. Cost of inventories comprisesall cost of purchase, cost of conversion and other costs incurred in bringing the inventories totheir present location and condition.
The cost of all categories of inventory is determined using weighted average cost method.
f) Retirement benefits
Contributions payable to employees, pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
g) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Notes to Financial Statements
Dr. Reddy’s New Zealand Limited 286
h) Income-tax expense
Income tax expense comprises current tax and deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and the correspond-ing deferred tax liabilities or assets are recognised using the tax rates that have been enacted orsubstantially enacted by the balance sheet date. Deferred tax assets are recognised only to theextent there is reasonable certainty that the assets can be realised in future; however, wherethere is unabsorbed depreciation or carry forward of losses, deferred tax assets are recognisedonly if there is a virtual certainty of realisations of such assets. Deferred tax assets are reviewedas at each balance sheet date and written-down or written-up to reflect the amount that is reason-ably / virtually certain (as the case may be) to be realised.
Deferred tax assets and liabilities are offset where the Company has a legally enforceable right toset-off assets against liabilities representing current tax, and where such assets and liabilitiesrelate to taxes on income levied by the same governing taxation laws.
i) Revenue recognition
Sale of goods
Revenue is recognized when the significant risks and rewards of ownership have been transferredto the buyer, recovery of the consideration is probable, the associated costs and possible returnof goods can be estimated reliably, there is no continuing management involvement with thegoods and the amount of revenue can be measured reliably. Revenue from the sale of goods ismeasured at the fair value of the consideration received or receivable, net of returns, sales taxand applicable trade discounts and allowances. Revenue includes shipping and handling costsbilled to the customer.
Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on the timeproportionate method.
j) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of past eventsand it is probable that an outflow of resources embodying economic benefits will be required tosettle the obligation. Provisions are recognised at the best estimate of the expenditure requiredto settle the present obligation at the balance sheet date. Provisions are measured on anundiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certain thatan inflow of economic benefits will arise, the asset and related income are recognised in theperiod in which the change occurs.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Notes to Financial Statements
Dr. Reddy’s New Zealand Limited 287
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised10,000 (previous year 10,000) shares of NZD 1 each 328 328
Issued10,000 (previous year 10,000) shares of NZD 1 each 328 328
Subscribed and paid-up10,000 (previous year 10,000) shares of NZD 1 each 328 328
328 328
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 10,000 328 10,000 328Add: Share issued during the year - - - -
Number of shares outstandingat the end of the year 10,000 328 10,000 328
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of NZD 1 per share. Eachholder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars No. of Equity % equity No. of Equity % equity
shares held shares held shares held shares held
Dr. Reddy's Laboratories SA 10,000 100 10,000 100
Notes to Financial Statements
Note 2 : Notes to financial statements
Dr. Reddy’s New Zealand Limited 288
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year 194 194Additions / (deductions) during the year - -
194 194
Securities premium reserveBalance at the beginning of the year 105,028 94,477Additions / (deductions) during the year - 10,551
105,028 105,028
DeficitBalance at the beginning of the year (19,048) 10,568Add: Current year profit / (loss) 8,682 (29,616)
Balance carried forward (10,366) (19,048)
94,856 86,174
2.3 : Trade PayablesPayables to holding company and other group companies 42,017 29,975Payables to others 5,922 1,587
47,939 31,562
2.4 : Other current liabilitiesAccrued expenses 1,254 1,264Due to statutory authorities 157 196Other current liabilities - 1,369
1,411 2,829
Dr. R
eddy’s New
Zealand Lim
ited289
Notes to F
inancial Statem
ents2.5 : Fixed assets (All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Gross Block Depreciation / Amortisation Net Block
Description As at As at As at For the As at As at As at
01.04.2012Additions Deletions Forex
31.03.2013 01.04.12 YearDeletions Forex
31.03.2013 31.03.2013 31.03.2012
Furniture and Fixtures 485 68 - - 553 240 162 - - 402 151 245
Total Tangible Assets (A) 485 68 - - 553 240 162 - - 402 151 245
Intangibles 105,013 - - - 105,013 105,013 - - - 105,013 - -
Total Intangible Assets (B) 105,013 - - - 105,013 105,013 - - - 105,013 - -
TOTAL (A+B) 105,498 68 - - 105,566 105,253 162 - - 105,415 151 245
Previous year 93,929 11,705 614 - 106,498 75,423 30,830 - - 106,253 245
Note 2 : Notes to financial statements (Continued)
Dr. Reddy’s New Zealand Limited 290
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.6: Inventories(Valued on weighted average basis)Stock-in-trade 40,175 34,345
40,175 34,345
2.7 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months - -Other debts Considered good 11,972 26,140Receivables from holding company and other group companies - 22,247
11,972 48,387Less: Provision for doubtful debts - -
11,972 48,387
2.8 : Cash and bank balancesCash on hand 8 7Bank balances In current accounts 88,209 35,897
88,217 35,904
2.9 : Short term loans and advances(Unsecured)Considered goodStaff loans and advances - 42Advance tax, net of provision for income taxes 2,875 1,582Other Advances 637 -
3,512 1,624
Dr. Reddy’s New Zealand Limited 291
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.10 : Other incomeInterest income 610 470Foreign exchange gain, net 5,085 -
5,695 470
2.11 : Changes in inventories of finished goods,work in progress and stock in tradeNet (increase) / decrease in stockOpening
Stock-in-trade 34,345 117,149Closing
Stock-in-trade 40,175 34,345
Net (increase) (5,830) 82,804
2.12 : Employee benefits expenseSalaries, wages and bonus 5,916 9,240Contribution to provident and other funds 62 79Staff welfare expenses 50 244
6,028 9,563
2.13 : Finance costsInterest Expenses - 127
- 127
2.14 : Other expenseLegal and professional 2,373 3,406Carriage outward 317 794Rates and taxes - 99Other selling expenses 15,767 19,609Repairs and maintenance Others - 39Travelling and conveyance 122 877Communication 352 939Rent 2,353 2,052Insurance - 506Foreign exchange loss, net - 826Printing and stationery 307 1,012Bank charges 147 141Miscellaneous 2,131 7,456
23,869 37,756
Dr. Reddy’s New Zealand Limited 292
2.15: Deferred taxationDeferred tax asset, net included in the balance sheet comprises the following:
As at As atParticulars 31 March 2013 31 March 2012
Deferred tax assets / (liabilities)Inventories 576 415Other Current assets 226 226Fixed assets 2 1Other Current Liabilities (297) (253)
Deferred Tax Asset, Net 507 389
2.16: Related party Disclosures
The company has the following amount due to/from related parties :
As at As atParticulars 31 March 2013 31 March 2012
i. Due from related parties(included in Trade Receivables):Dr. Reddy’s Laboratories SA - 22,247
ii. Due to related parties (included in Trade Payables):Dr. Reddy’s Laboratories Limited 41,713 29,975Dr. Reddy’s Laboratories (Australia) Pty. Limited 304 -
2.17: Commitments and contingent liabilities
There were no Commitments / contingent liabilities as at 31 March 2013 (Previous year ̀ 22,550).
2.18: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.19: The Company incorporated in New Zealand, is a 100% subsidiary of Dr. Reddy’s LaboratoriesSA.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy Abhijit MukerjeePartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Dr. Reddy’s Pharma SEZ Limited 293
Dear Members,
Your Directors present the 4th Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights(` in Thousands)
Particulars 31 March 2013 31 March 2012
Loss for the period (14) (15)Balance Brought forward (195) (180)Balance Carried forward to Balance Sheet (209) (195)
Operations
The Company did not have any operation during the year.
Dividend
Your Directors do not recommend any dividend for the financial year ending 31 March 2013.
Share capital
During the year under review, there was no change in the share capital of the Company.
Directors Responsibility statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the company at the end of the financial year 2012-13 and of net loss of the companyfor that period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Directors
Mr. G V Prasad, retires by rotation at the ensuing Annual General Meeting scheduled on 29 July 2013and being eligible seeks re-appointment. Your Directors recommends his re-appointment for yourapproval at the ensuing AGM.
Mr. Umang Vohra resigned from the Board of Directors of the Company and ceases to a Director ofthe Company with effect from 11 February 2013. The Board accorded its deep appreciation for theservices rendered by him during his term.
The Board of Directors had appointed Mr. Saumen Chakraborty as an Additional Director on theBoard of Directors of the Company on 11 February 2013. He will hold this office till the conclusion of
DIRECTORS’ REPORT
Dr. Reddy’s Pharma SEZ Limited 294
the 4th Annual General Meeting of the Company. Requisite notice under Section 257 of the CompaniesAct, 1956 has been received from a member proposing his appointment. It is proposed to appoint himas a Director of the Company liable to retire by rotation. The resolution for the same has been includedin the notice of the 4th Annual General Meeting of the Company.
Auditors
The Statutory Auditors of the Company M/s. A. Ramachandra Rao & Co., Chartered Accountants,retire at the ensuing 4th Annual General Meeting and have confirmed their eligibility and willingness toaccept office of auditors, if re-appointed. The Board of Directors recommend re-appointment of M/s.A. Ramachandra Rao & Co., Chartered Accountants as Statutory Auditors of the Company for thefinancial year 2013-14 for shareholder’s approval.
Particulars of Employees
There are no employees who are drawing salary more than the amount as specified under the provisionsof Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees)Rules, 1975 as amended from time to time. Hence the relevant provisions are not applicable to yourCompany.
Conservation of energy, research and developments, technology absorption, foreign exchangeearnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgements
Your Directors place on record their sincere appreciation for support and co-operation extended by allthe concerned to the Company during the year.
for and on behalf of the Board of Directors
Place : Hyderabad Satish Reddy Saumen ChakrabortyDate : 10 May 2013 Director Director
Dr. Reddy’s Pharma SEZ Limited 295
AUDITORS’ REPORT
ToThe Members ofM/s. Dr Reddy’s Pharma SEZ LtdHyderabad
We have audited the accompanying financial statements of Dr Reddy’s Pharma SEZ Ltd whichcomprise the Balance Sheet as at 31 March 2013, and the Statement of Profit and Loss and CashFlow Statement for the year then ended, and a summary of significant accounting policies and otherexplanatory information.
Management is responsible for the preparation of these financial statements that give a true and fairview of the financial position, financial performance and cash flows of the Company in accordancewith the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act,1956. This responsibility includes the design, implementation and maintenance of internal controlrelevant to the preparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with the Standards on Auditing issued by the Institute of CharteredAccountants of India. Those Standards require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether the financial statements are freefrom material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made by management,as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion.
01. In our opinion and to the best of our information and according to the explanations given to us,the financial statements give the information required by the Act in the manner so required andgive a true and fair view in conformity with the accounting principles generally accepted inIndia:
a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March2013;
b) in the case of the Profit and Loss Account, of the loss for the year ended on that date;and
c) in the case of the Cash Flow Statement, of the cash flows for the year ended on thatdate.
02. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Governmentof India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure astatement on the matters specified in paragraphs 4 and 5 of the Order.
Dr. Reddy’s Pharma SEZ Limited 296
03. As required by section 227(3) of the Act, we report that:
a) we have obtained all the information and explanations which to the best of our knowledgeand belief were necessary for the purpose of our audit;
b) in our opinion proper books of account as required by law have been kept by the Companyso far as appears from our examination of those books
c) the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt withby this Report are in agreement with the books of account.
d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statementcomply with the Accounting Standards referred to in subsection (3C) of section 211 ofthe Companies Act, 1956;
e) on the basis of written representations received from the directors as on 31 March 2013,and taken on record by the Board of Directors, none of the directors is disqualified as on31 March 2013, from being appointed as a director in terms of clause (g) of sub-section(1) of section 274 of the Companies Act, 1956.
f) Since the Central Government has not issued any notification as to the rate at which thecess is to be paid under section 441A of the Companies Act, 1956 nor has it issued anyRules under the said section, prescribing the manner in which such cess is to be paid, nocess is due and payable by the Company.
For A. Ramachandra Rao &Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra RaoPlace : Hyderabad PartnerDate : 10 May 2013 Membership No: 9750
Dr. Reddy’s Pharma SEZ Limited 297
ANNEXURE TO THE AUDITORS’ REPORT(Of even date referred to in Para (2) of our Report)
i. a) The Company does not have any fixed assets and hence para 4(1)(a) to (c) are notapplicable.
ii. a) The company does not have any inventories and as such verification of stocks does notarise
b) In view of the above, the clauses 4(ii)(c) are not applicable to the company
iii. a) the company has not granted or taken any loans, secured or unsecured, from or tocompanies, firms or other parties covered in the register maintained u/s 301 of the Actduring the year.
b) In view of the above, the sub-clauses (b), 4(iii)(c), and 4(iii)(d), are not applicable to thecompany.
iv. In our opinion and according to the information and explanations given to us, there is an adequateinternal control procedures commensurate with the size of the Company and the nature of itsbusiness for the purchase of inventory and fixed assets.The Company does not have anypurchase of inventory and also for the sale of goods . During the course of our audit, we havenot observed any continuing failure to correct major weaknesses in internal control system.
v. In our opinion, and according to the information and explanations given to us, the company hasnot entered into any transactions referred to in section 301 of the Act and hence clause 4(v)(b)is not applicable to the company for the year;
vi. Based on the information provided to us, in our opinion, the Company has not accepted anyDeposits from the public during the year and hence, in our opinion, the Clause 4(vi) is notapplicable to the company for the year;
vii. In our opinion, the company has an internal audit system to commensurate with its size andnature of its business.
viii. We are of the opinion, based on the information provided to us, that the Central Governmenthas not prescribed any accounts and records, which are required to be maintained undersection 209(1)(d) of the Act .
ix. a) According to the records of the company, the company is regular in depositing theundisputed statutory dues including Sales tax, Income-tax, Customs duty, Excise dutyand Employees State Insurance and Provident Fund and cess, investor education fundwith the appropriate authorities. We have been informed that the company is not liable topay Wealth Tax. We have been informed that the provisions of wealth tax are notapplicable to the company;
b) According to the information and explanations given to us, there are no dues of salestax/income tax/ customs duty/Wealth tax /excise duty/cess to be deposited on accountof any dispute;
c) Further, since the Central government has till date not prescribed the amount of cesspayable under section 441A of the Companies act 1956,we are not in a position tocomment upon the regularity or otherwise of the company in depositing the same.
Dr. Reddy’s Pharma SEZ Limited 298
x. In our opinion the accumulated losses of the company are not more than fifty percent of its networth The Company has incurred cash losses during the financial year covered by our auditand in the immediately preceding financial year.
xi. Based on the information provided and explanation given to us, we are of the opinion that thecompany has not borrowed any terms loans from any banks and hence the sub clause (xi) isnot applicable to the company for the year.
xii. In our opinion and according to the information and explanation given to us, no loans andadvances have been granted by the company on the basis of security by way of pledge ofshares, debentures and other securities.
xiii. In our opinion, the Company is not a Chit fund or Nidhi / Mutual Benefit Fund / Society andhence clause 4(xiii) of the Companies (Auditor’s Report) Order 2003 is not applicable to theCompany.
xiv. Based on the information given to us, the Company has not dealt or traded in shares, securities,debentures or other investments during the year.
xv. Based on the information provided to us, the Company has not given guarantees for loanstaken by others from Banks or Financial Institutions.
xvi. According to the information and explanations given to us, the company has not applied anyterm loans during the year and hence clause 4(xvi) of the order is not applicable to the company.
xvii. According to the information and explanations given to us, and on an overall examination of theBalance Sheet of the Company, we are of the opinion that the funds raised on short term basishave not been used for long term investment;
xviii. Based on the information provided and explanations offered, during the year, the Companyhas not made any preferential allotment of shares to parties and companies covered in theregister maintained u/s 301 of the Companies Act 1956 and hence sub clause (xvii) of the orderis not applicable to the company for the year.
xix. The Company has not issued any debentures and not created any securities or charges inrespect of any debentures.
xx. The Company has not raised any money by way of Public Issue during the year.
xxi. In our opinion and according to the information provided and explanations offered to us, nofraud on or by the Company has been noticed or reported during the year.
For A. Ramachandra Rao &Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra RaoPlace : Hyderabad PartnerDate : 10 May 2013 Membership No: 9750
Dr. Reddy’s Pharma SEZ Limited 299
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 500 500Reserves and surplus 2.2 (209) (195)
291 305
Current liablitiesOther current liabilities 2.3 27 19
TOTAL 319 324
ASSETSNon-current assets - -Current assetsCash and bank balances 2.4 319 324
TOTAL 319 324
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy Saumen ChakrabortyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Dr. Reddy’s Pharma SEZ Limited 300
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
Income - -
Total Revenue - -
ExpensesOther expenses 2.5 14 15
Total expenses 14 15
Loss before exceptional andextraordinary items and tax (14) (15)Exceptional items - -
Loss before extraordinary items and tax (14) (15)Extraordinary Items - -
Loss before tax (14) (15)Tax expense Current tax - - Deferred tax - -
Loss for the year (14) (15)
Earnings per shareBasic - Par value ` 10 per share 2.6 (0.27) (0.30)Diluted - Par value ` 10 per share (0.27) (0.30)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy Saumen ChakrabortyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Dr. Reddy’s Pharma SEZ Limited 301
Cash Flow Statement
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars year ended year ended
31 March 2013 31 March 2012
Cash flow from operating activitiesLoss for the year (14) (15)
Operating profit before working capital changes (14) (15)Increase/(Decrease) in Other Current Liabilities 9 (161)
Cash used in Operations (5) (176)Less: income tax paid - -
Net cash used in operating activities (5) (176)
Cash flows From/(Used In) investing activities - -Cash flows From/(Used In) financing activites - -
Net decrease in cash & bank balances (5) (176)Cash & bank balances at the beginning of the year 324 500
Cash & bank balances at the end of the year 319 324
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy Saumen ChakrabortyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Dr. Reddy’s Pharma SEZ Limited 302
Note 1: Significant Accounting Policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation
The financial statements have been prepared and presented in accordance with Indian GenerallyAccepted Accounting Principles (GAAP) under the historical cost convention on the accrualbasis. GAAP comprises accounting standards notified by the Central Government of Indiaunder section 211(3C) of Companies Act 1956, other pronouncements of Institute of CharteredAccountants of India, provisions of Companies Act 1956. The financial statements are roundedoff to the nearest thousands.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian RupeesThousands, for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Actual results could differ from these estimates.Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision toaccounting estimates is recognised prospectively in the current and future periods.
c) Fixed assets, depreciation and amortisation
Fixed assets are carried at the cost of acquisition or construction less accumulated depreciation.The cost of fixed assets includes non-refundable taxes, duties, freight and other incidentalexpenses related to the acquisition and installation of the respective assets. Borrowing costsdirectly attributable to acquisition or construction of those fixed assets which necessarily take asubstantial period of time to get ready for their intended use are capitalised.
Land is not depreciated. Depreciation on other fixed assets is provided using the straight-linemethod at the rates specified in Schedule XIV to the companies Act, 1956 or based on theuseful life of the assets as estimated by Management whichever is higher. Depreciation iscalculated on a pro-rata basis from the date of installation till the date the assets are sold ordisposed off. Individual assets costing less than ` 5,000 are depreciated in full in the year ofacquisition.
d) Income-tax expense
Income tax expense comprises current tax and deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and thecorresponding deferred tax liabilities or assets are recognised using the tax rates that havebeen enacted or substantially enacted by the balance sheet date. Deferred tax assets arerecognised only to the extent there is reasonable certainty that the assets can be realised in
Notes to Financial Statements
Dr. Reddy’s Pharma SEZ Limited 303
future; however, where there is unabsorbed depreciation or carry forward of losses, deferredtax assets are recognised only if there is a virtual certainty of realisation of such assets.
Deferred tax assets are reviewed at each balance sheet date and are written-down or written-up to reflect the amount that is reasonably/virtually certain (as the case may be) to be realised.The break-up of the major components of the deferred tax assets and liabilities as at balancesheet date has been arrived at after setting off deferred tax assets and liabilities where theCompany has a legally enforceable right to set-off assets against liabilities and where suchassets and liabilities relate to taxes on income levied by the same governing taxation laws.
e) Earnings per share
The basic earnings per share (“EPS”) is computed by dividing the net profit after tax for the yearby the weighted average number of equity shares outstanding during the year. For the purposeof calculating diluted earnings per share, net profit after tax for the year and the weightedaverage number of shares outstanding during the year are adjusted for the effects of all dilutivepotential equity shares. The dilutive potential equity shares are deemed converted as of thebeginning of the period, unless they have been issued at a later date. The diluted potentialequity shares have been adjusted for the proceeds receivable had the shares been actuallyissued at fair value (i.e. the average market value of the outstanding shares.
f) Provisions and contingent liabilities
The Company creates a provision when there is a present obligation as a result of a past eventthat probably requires an outflow of resources and a reliable estimate can be made of theamount of the obligation. A disclosure for a contingent liability is made when there is a possibleobligation or a present obligation that may, but probably will not, require an outflow of resources.Where there is possible obligation or a present obligation in respect of which the likelihood ofoutflow of resources is remote, no provision or disclosure is made.
g) Investments
Non-current investments are carried at cost less any other-than-temporary diminution in value,determined separately for each individual investment. The reduction in the carrying amount isreversed when there is a rise in the value of the investment or if the reasons for the reductionno longer exist.
Current investments are carried at the lower of cost and fair value. The comparison of cost andfair value is done separately in respect of each category of investment.
h) Revenue recognition
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
Service income is recognised as per the terms of contracts with customers when the relatedservices are performed, or the agreed milestones are achieved.
Notes to Financial Statements
Note 1: Significant Accounting Policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Dr. Reddy’s Pharma SEZ Limited 304
Notes to Financial Statements
Note 2: Notes to financial statements
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share Capital :
Authorised1,000,000 (previous year 1,000,000) equity shares of ` 10/- each 10,000 10,000
Issued, Subscribed & Paid up:50,000 (previous year 50,000)Equity Shares of ` 10/- each fully paid up 500 500
500 500
(a) Reconciliation of the shares outstanding at the beginning and at the end of reportingperiod
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
shares shares
Number of shares at the beginningof the period 50,000 500 50,000 500Issued during the period - - - -
Outstanding at the end of the period 50,000 500 50,000 500
(b) Terms/rights attached to shares
The company has only one class of equity share having a par value of ̀ 10/- per share . Eachholder of equity share is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars No. of % holding No. of % holding
shares in the class shares in the class
Dr Reddy’s Laboratories Ltd 49,994 99.99 49,994 99.99
Dr. Reddy’s Pharma SEZ Limited 305
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars As at As at31 March 2013 31 March 2012
2.2 : Reserves and surplusDeficitBalance in profit and loss account brought forward (195) (180)Add: Transfer from General Reserve - -
(195) (180)Add: Current Year Loss (14) (15)
Balance Carried Forward (209) (195)
2.3 : Other Current liabilitiesOutstanding Liabilities 27 19
27 19
2.4: Cash and bank balancesCash on hand - -Bank balances In current accounts 319 324
319 324
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.5: Other expensesRates & Taxes 3 3Bank charges - 1Auditors’ remuneration 11 11
14 15
Notes to Financial Statements
Note 2: Notes to financial statements (Continued)
Dr. Reddy’s Pharma SEZ Limited 306
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.6 : Earnings per shareLoss for the year (14) (15)
Shares:Weighted average number of equity sharesoutstanding during the year - Basic 50,000 50,000Weighted average number of equity sharesoutstanding during the year - Diluted 50,000 50,000
Basic Earnings / (Loss) in ` per share (0.27) (0.30)Diluted Earnings / (Loss) in ` per share (0.27) (0.30)
2.7 : Comparitive Figures
Previous year’s figures have been regrouped / reclassified wherever necessary, to conform tocurrent year presentation.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy Saumen ChakrabortyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2: Notes to financial statements (Continued)
Dr. Reddy’s Srl 307
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012
Loss for the period after taxation (167,073) (162,740)Balance brought forward (666,278) (503,538)Balance carried forward to Balance Sheet (833,351) (666,278)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Sameer Natu Stanislao Carlo CaputoPlace : Hyderabad Director DirectorDate : 10 May 2013
DIRECTORS’ REPORT
Dr. Reddy’s Srl 308
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Dr. Reddy’s Srl, a company incorporatedand administered outside India, which comprise the Balance Sheet as at 31 March 2013, and theStatement of Profit and Loss for the year ended, and a summary of significant accounting policies andother explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Dr. Reddy’s Srl 309
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Dr. Reddy’s Srl 310
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 6,234 6,234Reserves and surplus 2.2 (861,672) (680,710)
(855,438) (674,476)Non current liabilitiesLong term borrowings 2.3 811,702 748,579Other long term liabilities 2.4 6,756 7,029
818,458 755,608Current liabilitiesTrade payables 2.5 48,269 30,411Other current liabilities 2.4 160,741 188,559
209,010 218,970
TOTAL 172,030 300,102ASSETSNon current assetsFixed assets Tangible assets 2.6 763 1,133 Intangible assets 2.6 - 24,900
763 26,033Current assetsInventories 2.7 8,680 47,308Trade receivables 2.8 84,117 149,105Cash and bank balances 2.9 56,994 54,321Short term loans and advances 2.10 21,476 23,335
171,267 274,069
TOTAL 172,030 300,102
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Sameer Natu Stanislao Carlo CaputoPartner Director DirectorMembership No. 9750Place : HyderabadDate : 10 May 2013
Balance Sheet
Dr. Reddy’s Srl 311
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeSales, net 253,714 284,162Other operating revenues 10,250 299
Revenue from operations 263,964 284,461Other income 2.11 607 865
Total revenue 264,571 285,326
ExpensesPurchase of stock-in-trade (traded goods) 138,262 167,630Changes in inventories of finished goods,work-in-progress and Stock-in-trade 2.12 38,628 2,089Employee benefits expense 2.13 29,386 39,711Depreciation and amortization expense 2.6 9,375 7,232Other expenses 2.14 199,039 231,404
Total expenses 414,690 448,066
Profit / (Loss) before exceptional items and tax (150,119) (162,740)Exceptional items - Impairment of intangibles 16,954 -
Profit / (Loss) before tax (167,073) (162,740)Tax expense Current tax - - Deferred tax - -
Profit / (Loss) for the year (167,073) (162,740)Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Sameer Natu Stanislao Carlo CaputoPartner Director DirectorMembership No. 9750Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Dr. Reddy’s Srl 312
Note 1: Significant accounting policies
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act, 1956, other pronouncements of Institute of Chartered Accountants of Indiaand provisions of Companies Act, 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
Notes to Financial Statements
Dr. Reddy’s Srl 313
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Tangible assets and depreciation
Tangible ixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intendeduse, as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of fixed assets are givenbelow:
YearsComputer equipment 3
e) Intangible assets and amortization
Intangible assets are recorded at the consideration paid for acquisition including any importduties and other taxes (other than those subsequently recoverable by the enterprise from thetaxing authorities), and any directly attributable expenditure on making the asset ready for itsintended use.
Intangible assets are amortised on a systematic basis over the best estimate of their usefullives, commencing from the date the asset is available to the Company for its use.
The management’s estimates of the useful lives for various categories of intangible assets areas follows:
Years
Intangibles (including product related intangibles) 13
f) Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value (NRV)is the estimated selling price in the ordinary course of the business, less the estimated costs of
Note 1: Significant accounting policies (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Notes to Financial Statements
Dr. Reddy’s Srl 314
completion and the estimated costs necessary to make the sale. Cost of inventories comprisesall cost of purchase, cost of conversion and other costs incurred in bringing the inventories totheir present location and condition.
The cost of all categories of inventory is determined using weighted average cost method.
g) Retirement benefits
Contributions payable to employees, pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
h) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the datesof the respective transactions. Exchange differences arising on foreign currency transactionssettled during the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
i) Revenue recognition
Sale of goods
Revenue is recognized when the significant risks and rewards of ownership have been transferredto the buyer, recovery of the consideration is probable, the associated costs and possiblereturn of goods can be estimated reliably, there is no continuing management involvement withthe goods and the amount of revenue can be measured reliably. Revenue from the sale ofgoods is measured at the fair value of the consideration received or receivable, net of returns,sales tax and applicable trade discounts and allowances. Revenue includes shipping andhandling costs billed to the customer.
Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
j) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financial
Note 1: Significant accounting policies (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Notes to Financial Statements
Dr. Reddy’s Srl 315
statements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
k) Impairment of assets
The Company assesses at each balance sheet date whether there is any indication that anasset may be impaired. If any such indication exists, the Company estimates the recoverableamount of the asset.
For the purpose of impairment testing, assets are grouped together into the smallest group ofassets (Cash Generating Unit or CGU) that generates cash inflows from continuing use thatare largely independent of the cash inflows of other assets or CGUs.
The recoverable amount of an asset or CGU is the greater of its value in use and its net sellingprice.
If such recoverable amount of the asset or the recoverable amount of the cash generating unitto which the asset belongs is less than its carrying amount, the carrying amount is reduced toits recoverable amount. The reduction is treated as an impairment loss and is recognised in thestatement of profit and loss. If at the balance sheet date there is an indication that if a previouslyassessed impairment loss no longer exists, the recoverable amount is reassessed and theasset is reflected at the recoverable amount subject to a maximum of amortised historical cost.
Note 1: Significant accounting policies (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Notes to Financial Statements
Dr. Reddy’s Srl 316
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised99,000 (previous year 99,000) shares of Euro 1 each 6,234 6,234
Issued99,000 (previous year 99,000) shares of Euro 1 each 6,234 6,234
Subscribed and paid-up99,000 (previous year 99,000) shares of Euro 1 each 6,234 6,234
6,234 6,234
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 99,000 6,234 99,000 6,234Add: Share issued during the year - - - -
Number of shares outstandingat the end of the year 99,000 6,234 99,000 6,234
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of Euro 1 per share. Eachholder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
ParticularsAs at 31 March 2013 As at 31 March 2012
No. of Equity % equity No. of Equity % equityshares held shares held shares held shares held
Reddy Pharma Italia S.p.A. 99,000 100 99,000 100
Notes to Financial Statements
Note 2 : Notes to financial statements
Dr. Reddy’s Srl 317
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year (27,474) 11,394Additions / (deductions) during the year (13,889) (38,868)
(41,363) (27,474)
Securities premium reserveBalance at the beginning of the year 13,042 -Additions / (deductions) during the year - 13,042
13,042 13,042DeficitBalance at the beginning of the year (666,278) (503,538)Add: Current year loss (167,073) (162,740)
Balance carried forward (833,351) (666,278)
(861,672) (680,710)
2.3 : Long term borrowingsUnsecuredBorrowings from holding company and other group companies 811,702 748,579
811,702 748,579
2.4 : Other liabilitiesa) Other long term liabilities
Deferred revenue - non current 6,756 7,029
6,756 7,029b) Other current liabilities
Due to holding company and other group companies 77,481 89,553Accrued expenses 48,569 49,743Due to statutory authorities 2,411 -Other current liabilities 32,280 49,263
160,741 188,559
2.5 : Trade PayablesPayables to holding company and other group companies 18,562 30,411Payables to others 29,707 -
48,269 30,411
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eddy’s Srl
318
Notes to F
inancial Statem
ents
2.6: Fixed assets (All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Gross Block Amortisation / Depreciation / Impairment Net Block
Description As at Additions Deletions Forex As at As at For the Impair- Deletions Forex As at As at As at
01.04.2012 31.03.2013 01.04.2012 Year ment 31.03.2013 31.03.2013 31.03.2012
Computers 2,854 190 - 67 3,111 1,721 589 - - 38 2,348 763 1,133
Total Tangible 2,854 190 - 67 3,111 1,721 589 - - 38 2,348 763 1,133Assets (A)
Product related 125,955 - - 2,950 128,905 102,166 8,786 15,634 - 2,319 128,905 - 23,789intangible
Other Intangibles 8,751 - - 362 9,113 7,640 - 1,320 - 153 9,113 - 1,111
Total Intangible 134,706 - - 3,312 138,018 109,806 8,786 16,954 - 2,472 138,018 - 24,900Assets (B)
TOTAL (A+B) 137,560 190 - 3,379 141,129 111,527 9,375 16,954 - 2,509 140,365 763 26,033
Previous year 122,255 7,852 - 7,098 137,560 97,165 7,232 - - 7,130 111,527 26,033
Note 2 : Notes to financial statements (Continued)
Dr. Reddy’s Srl 319
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.7 : Inventories(Valued on weighted average basis)Stock-in-trade 8,680 47,308
8,680 47,308
2.8 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months Considered good 31,266 - Considered doubtful 36,488 31,242Other debts Considered good 52,851 138,104Receivables from holding company and other group companies - 11,001
120,605 180,347Less: Provision for doubtful debts (36,488) (31,242)
84,117 149,105
2.9 : Cash and bank balancesCash on hand 43 29Bank balances In current accounts 39,577 20,358Bank deposits 17,374 33,934
56,994 54,321
2.10 : Short term loans and advances(Unsecured)Considered goodAdvances to material suppliers 1,207 1,179Balances with Statutory Agencies 15,939 19,881Prepaid expenses 2,617 314Other Advances 1,713 1,961
21,476 23,335
Dr. Reddy’s Srl 320
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.11 : Other incomeInterest income 607 556Foreign exchange gain, net - 309
607 865
2.12 : Changes in inventories of finished goods,work in progress and stock in tradeNet (increase) / decrease in stockOpeningStock in trade 47,308 49,397ClosingStock in trade 8,680 47,308
Net (increase) / decrease in stock 38,628 2,089
2.13 : Employee benefits expenseSalaries, wages and bonus 28,549 38,932Staff welfare expenses 837 779
29,386 39,711
2.14 : Other expenseLegal and professional 46,578 56,088Carriage outward 9,501 5,300Commision on Sales 43,131 53,140Other selling expenses 52,754 54,234Travelling and conveyance 5,621 9,630Communication 975 1,995Rent 336 -Insurance 485 523Foreign exchange loss, net 447 -Provision - Advances & Debtors 5,149 18,480Printing and stationery 1,466 1,945Bank charges 3,391 3,596Miscellaneous 29,205 26,474
199,039 231,404
Dr. Reddy’s Srl 321
2.15: Related Party Transactions:
The company has the following amount due to/from related parties :
ParticularsAs at As at
31 March 2013 31 March 2012
i) Due to related parties(included in Borrowings and Other liabilities):Dr. Reddy’s Laboratories Limited 65,916 8,455Dr. Reddys Pharma Italia S.p.A. 823,267 829,677
ii) Due to related parties (included in Trade Payables):Dr. Reddy’s Laboratories Limited 18,562 30,411
iii) Due from related parties (included in Trade Receivables):Dr. Reddys Pharma Italia S.p.A. - 11,001
2.16: Commitments and contingent liabilities
There were no commitments and contingent liabilities as at 31 March 2013 (previous year: Nil).
2.17: Impairment of Intangibles
Based on the business performance and expected cash flows from its business, the Companycarried out an impairment test of its product related intangibles and recorded an impairmentloss of ` 16,954 during the year ended 31 March 2013.
2.18: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.19: The Company, incorporated under the laws of Italy, is a 100% subsidiary of Reddy PharmaItalia S.p.A.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Sameer Natu Stanislao Carlo CaputoPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Dr. Reddy’s Venezula, C.A. 322
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012
Loss for the period after taxation (17,198) (29,843)Balance brought forward (30,084) (241)Balance carried forward to Balance Sheet (47,282) (30,084)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Jayadeep Shukla
General Manager
Place : HyderabadDate : 10 May 2013
DIRECTORS’ REPORT
Dr. Reddy’s Venezula, C.A. 323
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Dr.Reddy’s Venezuela, C.A ., a companyincorporated and administered outside India, which comprise the Balance Sheet as at 31 March2013, and the Statement of Profit and Loss for the year ended, and a summary of significant accountingpolicies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act,1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the Loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Dr. Reddy’s Venezula, C.A. 324
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Dr. Reddy’s Venezula, C.A. 325
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 58,316 4,700Reserves and surplus 2.2 (47,282) (30,084)
11,034 (25,384)Current liablitiesShort term borrowings 2.3 6 33,954Trade payables 2.4 145 199Other current liabilities 2.5 4,764 27Short term provisions 2.6 55 -
4,970 34,180
TOTAL 16,004 8,796
ASSETSCurrent assets
Trade receivables 2.7 5,487 -Cash and bank balances 2.8 10,173 8,698Short term loans and advances 2.9 336 98Other current assets 2.10 8 -
16,004 8,796
TOTAL 16,004 8,796
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Jayadeep ShuklaPartner General ManagerMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Dr. Reddy’s Venezula, C.A. 326
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeSales, net 5,444 -
Total revenue 5,444 -
ExpensesCost of material consumed(including packing material consumed) 4,324 -Employee benefits expense 2.11 6,618 316Finance costs 2.12 2,176 27,658Other expenses 2.13 9,524 1,869
Total expenses 22,642 29,843
Profit / (Loss) before tax (17,198) (29,843)Tax expense - -
Profit / (Loss) for the year (17,198) (29,843)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Jayadeep ShuklaPartner General ManagerMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Dr. Reddy’s Venezula, C.A. 327
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented under the historical cost conventionon the accrual basis of accounting in accordance with the accounting principles generallyaccepted in India (“GAAP”) and comply with the mandatory Accounting Standards (“AS”) notifiedby the Central Government of India under section 211(3C) of Companies Act 1956, otherpronouncements of Institute of Chartered Accountants of India and provisions of CompaniesAct, 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
Dr. Reddy’s Venezula, C.A. 328
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
c) Retirement benefits
Contributions payable to employees, pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
d) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
e) Provisions and contingentliabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
f) Revenue recognition
Sale of goods
Revenue from sale of goods is recognised when significant risks and rewards in respect ofownership of products are transferred to customers. Revenue from product sales is statedexclusive of returns, sales tax and applicable trade discounts and allowances.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Dr. Reddy’s Venezula, C.A. 329
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capital
Issued*10,633 (previous year 1000) Equity shares of VEB 430 each 58,316 4,700
Subscribed and paid-up10,633 (previous year 1000) Equity shares of VEB 430 each 58,316 4,700
58,316 4,700* No concept of authorised share capital in this company
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 1,000 4,700 1,000 4,700Add: Share issued during the year 9,633 53,616 - -
Number of shares outstandingat the end of the year 10,633 58,316 1,000 4,700
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of VEB 430 per share.Each holder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars No. of Equity % equity No. of Equity % equity
shares held shares held shares held shares held
Dr. Reddy’s Laboratories SA 10,623 99.91 990 99.00
Notes to Financial Statements
Note 2 : Notes to financial statements
Dr. Reddy’s Venezula, C.A. 330
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplusDeficitBalance at the beginning of the year (30,084) (241)Add: Current year loss (17,198) (29,843)
(47,282) (30,084)
2.3 : Short term borrowingsUnsecuredOther short term loans 6 33,954
6 33,954
2.4 : Trade PayablesPayables to others 145 199
145 199
2.5 : Other current liabilitiesAccrued expenses 4,714 -Salary and bonus payable 50 -Other current liabilities - 27
4,764 27
2.6 : Short term provisionsAllowance for sales returns 55 -
55 -
2.7 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months - -Other debts Considered good 5,487 -
5,487 -Less: Provision for doubtful debts - -
5,487 -
Dr. Reddy’s Venezula, C.A. 331
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.8 : Cash and bank balancesCash on hand - -Bank balances In current accounts 10,173 8,698
10,173 8,698
2.9 : Short term loans and advancesUnsecuredConsidered goodStaff loans and advances 336 98
336 98
2.10 : Other Current AssetsOther receivables from holding companyand other group companies 8 -
8 -
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.11 : Employee benefits expenseSalaries, wages and bonus 6,456 300Staff welfare expenses 162 16
6,618 316
2.12 : Finance costsInterest Expenses 2,176 27,658
2,176 27,658
2.13 : Other expenseLegal and professional 500 476Rates and taxes 653 76Foreign exchange loss, net 8,075 1,041Printing and stationery 158 -Bank charges 31 194Miscellaneous 107 82
9,524 1,869
Dr. Reddy’s Venezula, C.A. 332
2.14: Commitments and contingent liabilities
There were no commitments or contingent liabilities as at 31 March 2013. (previous year: NIL)
2.15: Related Party Disclosures:
The company has the following amount due to/from related parties :
As at As atParticulars 31 March 2013 31 March 2012
i. Due from related parties(included in Other current assets)Dr. Reddy’s Laboratories Ltd. 8 -
2.16: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.17: The Company incorporated in Venezuela, is a subsidiary of Dr. Reddy’s Laboratories SA,Switzerland.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Jayadeep ShuklaPartner General ManagerMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Dr.Reddy’s Laboratories (Australia) Pty Limited 333
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012
Profit/ (Loss) for the period after taxation 66,593 (138,674)Balance brought forward (507,612) (368,938)Balance carried forward to Balance Sheet (441,020) (507,612)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of profit of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place : Hyderabad Satish Reddy Azhar IbrahimDate : 10 May 2013 Director Director
DIRECTORS’ REPORT
Dr.Reddy’s Laboratories (Australia) Pty Limited 334
AUDITORS’ REPORT
To
The Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Dr. Reddy’s Laboratories (Australia)Pty. Limited , a company incorporated and administered outside India, which comprise the BalanceSheet as at 31 March 2013, and the Statement of Profit and Loss for the year ended, and a summaryof significant accounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Dr.Reddy’s Laboratories (Australia) Pty Limited 335
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao &Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra RaoPlace : Hyderabad PartnerDate : 10 May 2013 Membership No: 9750
Dr.Reddy’s Laboratories (Australia) Pty Limited 336
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 35,126 35,126Reserves and surplus 2.2 (439,225) (505,817)
(404,099) (470,691)Non current liabilitiesLong term borrowings 2.3 540,778 475,013
540,778 475,013Current liabilitiesTrade payables 2.4 288,447 162,070Other current liabilities 2.5 107,704 102,157Short term provisions 2.6 3,868 2,824
400,019 267,051
TOTAL 536,698 271,373ASSETSNon current assetsFixed assets Tangible assets 2.7 193 473 Intangible assets 2.7 391 883Deferred tax assets, net 2.20 102,158 -Long term loans and advances 2.8 904 845
103,646 2,201Current assetsInventories 2.9 100,589 51,783Trade receivables 2.10 254,270 209,585Cash and bank balances 2.11 76,191 7,804Short term loans and advances 2.12 2,002 -
433,052 269,172
TOTAL 536,698 271,373Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy Azhar IbrahimPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Dr.Reddy’s Laboratories (Australia) Pty Limited 337
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeSales, net 690,891 304,146Other operating revenues 3,642 4,611
Revenue from operations 694,533 308,757Other income 2.13 608 249
Total revenue 695,141 309,006
ExpensesPurchase of stock-in-trade (traded goods) 482,532 189,225Changes in inventories of finished goods,work-in-progress and Stock-in-trade 2.14 (48,806) (16,295)Employee benefits expense 2.15 103,568 61,110Finance costs 2.16 36,655 41,182Depreciation and amortization expense 2.7 1,066 542Other expenses 2.17 154,978 171,916
Total expenses 729,993 447,680
Profit / (Loss) before tax (34,852) (138,674)Tax expense Current tax - - Deferred tax (101,445) -
Profit for the year 66,593 (138,674)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy Azhar IbrahimPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Dr.Reddy’s Laboratories (Australia) Pty Limited 338
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under Section 211(3C) ofCompanies Act, 1956, other pronouncements of Institute of Chartered Accountants of Indiaand provisions of Companies Act, 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with Section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option of
Notes to Financial Statements
Dr.Reddy’s Laboratories (Australia) Pty Limited 339
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
the counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intendeduse, as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000/- are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of fixed assets are givenbelow:
YearsElectrical and office equipment (other than computer equipment) 5 to 15
e) Intangible assets and amortisation
Intangible assets are recorded at the consideration paid for acquisition including any importduties and other taxes (other than those subsequently recoverable by the enterprise from thetaxing authorities), and any directly attributable expenditure on making the asset ready for itsintended use.
Intangible assets are amortised on a systematic basis over the best estimate of their usefullives, commencing from the date the asset is available to the Company for its use.
The management estimates the useful lives for the various intangible assets as follows:
YearsGoodwill 5
f) Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value (NRV)is the estimated selling price in the ordinary course of the business, less the estimated costs ofcompletion and the estimated costs necessary to make the sale. Cost of inventories comprisesall cost of purchase, cost of conversion and other costs incurred in bringing the inventories totheir present location and condition.
The cost of all categories of inventory is determined using weighted average cost method.
Dr.Reddy’s Laboratories (Australia) Pty Limited 340
g) Retirement benefits
Contributions payable to employee pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
h) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
i) Revenue recognition
Sale of goods
Revenue is recognized when the significant risks and rewards of ownership have been transferredto the buyer, recovery of the consideration is probable, the associated costs and possiblereturn of goods can be estimated reliably, there is no continuing management involvement withthe goods and the amount of revenue can be measured reliably. Revenue from the sale ofgoods is measured at the fair value of the consideration received or receivable, net of returns,sales tax and applicable trade discounts and allowances. Revenue includes shipping andhandling costs billed to the customer.
Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
j) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Dr.Reddy’s Laboratories (Australia) Pty Limited 341
k) Income-tax expense
Income tax expense comprises current tax and deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and thecorresponding deferred tax liabilities or assets are recognised using the tax rates that havebeen enacted or substantially enacted by the balance sheet date. Deferred tax assets arerecognised only to the extent there is reasonable certainty that the assets can be realised infuture; however, where there is unabsorbed depreciation or carry forward of losses, deferredtax assets are recognised only if there is a virtual certainty of realisations of such assets.Deferred tax assets are reviewed as at each balance sheet date and written-down or written-upto reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.
Deferred tax assets and liabilities are offset where the Company has a legally enforceable rightto set-off assets against liabilities representing current tax, and where such assets and liabilitiesrelate to taxes on income levied by the same governing taxation laws.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Dr.Reddy’s Laboratories (Australia) Pty Limited 342
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised1,000,000 (previous year 1,000,000)ordinary shares of AUD 1 each 35,126 35,126
Issued1,000,000 (previous year 1,000,000)ordinary shares of AUD 1 each 35,126 35,126
Subscribed and paid-up1,000,000 (previous year 1,000,000)ordinary shares of AUD 1 each 35,126 35,126
35,126 35,126
(a) Reconciliation of the shares outstanding at the beginning and at the end of reportingperiod
As at 31 March 2013 As at 31 March 2012Particulars No. of equity Amount No. of equity Amount
shares shares
Number of shares outstandingat the beginning of the period 1,000,000 35,126 1,000,000 35,126
Add: Share issued during the year - - - -
Number of shares outstandingat the end of the year 1,000,000 35,126 1,000,000 35,126
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of AUD 1 per share.Each holder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars No. of Equity Amount No. of Equity Amount
shares held shares held
Dr. Reddy’s Laboratories Limited 1,000,000 100 1,000,000 100
Notes to Financial Statements
Note 2 : Notes to financial statements
Dr.Reddy’s Laboratories (Australia) Pty Limited 343
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars As at As at31 March 2013 31 March 2012
2.2 : Reserves and surplusSecurities premium reserveBalance at the beginning of the year 1,795 1,795Additions / (deductions) during the year - -
1,795 1,795DeficitBalance at the beginning of the year (507,612) (368,938)Add: Current year profit / (loss) 66,593 (138,674)
Balance carried forward (441,020) (507,612)
(439,225) (505,817)
2.3 : Long term borrowingsUnsecuredBorrowings from holding company and other group companies 540,778 475,013
540,778 475,013
2.4 : Trade PayablesPayables to holding company and other group companies 246,307 126,131Payables to others 42,140 35,939
288,447 162,070
2.5 : Other current liabilitiesDue to holding company and other group companies 91,474 84,965Accrued expenses 9,288 7,686Due to statutory authorities 3,773 9,503Other current liabilities 3,169 3
107,704 102,157
2.6 : Short term provisionsProvision for employee benefits 3,868 2,733FBT Payable - 91
3,868 2,824
Dr.R
eddy’s Laboratories (Australia) P
ty Limited
344
Notes to F
inancial Statem
ents
Note 2 : Notes to financial statements (Continued)
2.7 : Fixed assets (All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Gross Block Depreciation / Amortisation Net Block
Description As at Additions Deletions Forex As at As at For the Deletions Forex As at As at As at
01.04.2012 31.03.2013 01.04.2012 year 31.03.2013 31.03.2013 31.03.2012
Electrical andOffice equipment 1,019 294 - - 1,313 546 574 - - 1,120 193 473
Total TangibleAssets (A) 1,019 294 - - 1,313 546 574 - - 1,120 193 473
Goodwill 1,779 - - - 1,779 896 492 - - 1,388 391 883
Total IntangibleAssets (B) 1,779 - - - 1,779 896 492 - - 1,388 391 883
Total (A+B) 2,798 294 - - 3,092 1,442 1,066 - - 2,508 584 1,356
Previous year 2,594 230 26 - 2,798 926 542 26 - 1,442 1,356
Dr.Reddy’s Laboratories (Australia) Pty Limited 345
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars As at As at31 March 2013 31 March 2012
2.8 : Long term loans and advances(Unsecured)Considered goodSecurity Deposits 904 845
904 845
2.9 : Inventories(Valued on weighted average basis)Stock-in-trade 100,589 51,783
100,589 51,783
2.10 : Trade Receivables(Unsecured)Other debts Considered good 253,966 209,585Receivables from holding company and other group companies 304 -
254,270 209,585Less: Provision for doubtful debts - -
254,270 209,585
2.11 : Cash and bank balancesCash on hand 14 124Bank balances In current accounts 76,177 7,680
76,191 7,804
2.12 : Short term loans and advances(Unsecured)Considered goodStaff loans and advances 436 -Prepaid expenses 1,566 -
2,002 -
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Dr.Reddy’s Laboratories (Australia) Pty Limited 346
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.13 : Other incomeInterest income 608 249
608 249
2.14 : Changes in inventories of finished goods,work in progress and stock in tradeNet (increase) / decrease in stockOpeningStock-in-trade 51,783 35,488
ClosingStock-in-trade 100,589 51,783
Net (increase) / decrease in stock (48,806) (16,295)
2.15 : Employee benefits expenseSalaries, wages and bonus 96,796 54,242Contribution to provident and other funds 6,772 2,949Staff welfare expenses - 3,919
103,568 61,110
2.16 : Finance costsInterest Expenses 36,655 41,182
36,655 41,182
2.17 : Other expenseLegal and professional 8,826 11,841Rates and taxes - 1Other selling expenses 20,642 7,246Travelling and conveyance 7,371 3,676Communication 4,189 2,148Rent 6,037 5,260Insurance - 119Foreign exchange loss, net 37,763 68,447Printing and stationery 1,897 972Bank charges 239 144Advertisements 8,130 1,808Miscellaneous 59,884 70,254
154,978 171,916
Dr.Reddy’s Laboratories (Australia) Pty Limited 347
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
2.18: Commitments and contingent liabilities
There were no commitments and contingent liabilities as at 31 March 2013 (Previous Year –Nil)
2.19: Related party disclosures
The company has the following amount due to/from related parties :
Particulars As at As at31 March 2013 31 March 2012
i. Due to related parties(included in long term borrowings):Dr. Reddy’s Laboratories Limited 540,778 475,013
ii. Due to related parties (included in Trade Payables):Dr. Reddy’s Laboratories Limited 246,307 126,131
iii. Due to related parties(included in Other Current Liabilities):Dr. Reddy’s Laboratories Limited 91,474 84,965
iv. Due from related parties(included in Trade Receivables):Dr. Reddy’s New Zealand Limited 304 -
2.20: Deferred taxation
Deferred tax asset, net included in the balance sheet comprises the following:
Particulars As at As at31 March 2013 31 March 2012
Deferred tax assets / (liabilities)
Inventories (1,308) -Losses carry forward 96,972 -Fixed Assets (4,850) -Other Current Liabilities 11,344 -
Deferred Tax Asset, Net 102,158 -
Dr.Reddy’s Laboratories (Australia) Pty Limited 348
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
2.21: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.22: The Company, incorporated in Australia, is a 100% subsidiary of Dr. Reddy’s LaboratoriesLimited.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy Azhar IbrahimPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Dr. Reddy’s Laboratories (EU) Limited 349
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Lakhs)
Particulars 31 March 2013 31 March 2012Profit for the period after taxation 3,556 4,115Balance brought forward 8,107 3,992Buy back of shares (7,452) -Balance carried forward to Balance Sheet 4,211 8,107
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-12 and of profit of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place : Hyderabad Satish Reddy V V ParsuramDate : 10 May 2013 Director Director
DIRECTORS’ REPORT
Dr. Reddy’s Laboratories (EU) Limited 350
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Dr. Reddy’s Laboratories (EU) Limited .,a company incorporated and administered outside India, which comprise the Balance Sheet as at 31March 2013, and the Statement of Profit and Loss for the year ended, and a summary of significantaccounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Dr. Reddy’s Laboratories (EU) Limited 351
b. In our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Dr. Reddy’s Laboratories (EU) Limited 352
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars Note31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 7,230 7,231Reserves and surplus 2.2 5,827 9,734
13,057 16,965Non current liabilitiesLong term borrowings 2.3 7,177 7,113
7,177 7,113Current liabilitiesTrade payables 2.4 608 300Other current liabilities 2.5 1,449 1,864Short term provisions 2.6 449 648
2,506 2,812
TOTAL 22,740 26,890ASSETSNon current assetsFixed assets Tangible assets 2.7 6,080 5,004 Intangible assets 2.7 406 478 Capital work-in-progress 17 1,466Non current investments 2.8 3,290 3,290Deferred tax assets, net 2.21 218 134Long term loans and advances 2.9 3 187
10,014 10,559Current assetsInventories 2.10 1,367 903Trade receivables 2.11 8,841 8,633Cash and bank balances 2.12 1,816 5,892Short term loans and advances 2.13 185 422Other current assets 2.14 517 481
12,726 16,331
TOTAL 22,740 26,890Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy V V ParsuramPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Dr. Reddy’s Laboratories (EU) Limited 353
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeSales, net 10,326 10,476Service income 7 4License fees - 4Other operating revenues 2.15 1,419 1,257
Revenue from operations 11,752 11,741Other income 2.16 32 28
Total revenue 11,784 11,769
ExpensesCost of material consumed(including packing material consumed) 1,256 987Purchase of stock-in-trade (traded goods) 459 500Changes in inventories of finished goods,work-in-progress and stock-in-trade 2.17 (440) 262Employee benefits expense 2.18 2,913 2,250Finance costs 2.19 206 195Depreciation and amortization expense 2.7 869 654Other expenses 2.20 2,733 2,228
Total expenses 7,996 7,076
Profit before tax 3,788 4,693Tax expense Current tax 314 616 Deferred tax (82) (39)
Profit for the year 3,556 4,115
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.As per our report of even date attachedfor A. Ramachandra Rao & Co. For and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy V V ParsuramPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Dr. Reddy’s Laboratories (EU) Limited 354
Note 1: Significant accounting policies(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and in accordance with the accounting principlesgenerally accepted in India (“GAAP”) and comply with the mandatory Accounting Standards(“AS”) notified by the Central Government of India under Section 211(3C) of Companies Act,1956, other pronouncements of Institute of Chartered Accountants of India and provisions ofthe Companies Act, 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with Section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
Dr. Reddy’s Laboratories (EU) Limited 355
Current assets/ liabilities include the current portion of non current financial assets/liabilities respectively. All other assets/ liabilities are classified as non current.
d) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intendeduse, as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of fixed assets are givenbelow:
YearsBuildings 25Plant and machinery 3 to 15Computer equipment 3
e) Intangible assets and amortisation
Intangible assets are recorded at the consideration paid for acquisition including any importduties and other taxes (other than those subsequently recoverable by the enterprise from thetaxing authorities), and any directly attributable expenditure on making the asset ready for itsintended use.
Intangible assets are amortised on a systematic basis over the best estimate of their usefullives, commencing from the date the asset is available to the Company for its use.
The management’s estimates of the useful lives for various categories of intangible assets areas follows:
Years
Goodwill 10
f) Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value (NRV)is the estimated selling price in the ordinary course of the business, less the estimated costs ofcompletion and the estimated costs necessary to make the sale. Cost of inventories comprises
Notes to Financial Statements
Note 1: Significant Accounting Policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Dr. Reddy’s Laboratories (EU) Limited 356
all cost of purchase, cost of conversion and other costs incurred in bringing the inventories totheir present location and condition.
The cost of all categories of inventory is determined using weighted average cost method.
g) Investments
Investments that are readily realisable and intended to be held for not more than one year fromthe date of acquisition are classified as current investments. All other investments are classifiedas non current investments.
Non current investments are carried at cost less any other-than-temporary diminution in value,determined separately for each individual investment. The reduction in the carrying amount isreversed when there is a rise in the value of the investment or if the reasons for the reductionno longer exist. Any reduction in the carrying amount and any reversal in such reductions arecharged or credited to the statement of profit and loss.
Current investments are carried at the lower of cost and fair value. The comparison of cost andfair value is done separately in respect of each category of investment.
h) Retirement benefits
Contributions payable to employees, pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
i) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
j) Revenue recognition
Sale of goods
Revenue is recognized when the significant risks and rewards of ownership have been transferredto the buyer, recovery of the consideration is probable, the associated costs and possiblereturn of goods can be estimated reliably, there is no continuing management involvement withthe goods and the amount of revenue can be measured reliably. Revenue from the sale ofgoods is measured at the fair value of the consideration received or receivable, net of returns,sales tax and applicable trade discounts and allowances. Revenue includes shipping andhandling costs billed to the customer.
Service Income
Revenue from services rendered, which primarily relate to contract research, is recognized inthe statement of profit and loss as the underlying services are performed. Upfront non-refundablepayments received under these arrangements are deferred and recognised as revenue overthe expected period over which the related services are expected to be performed.
Notes to Financial Statements
Note 1: Significant Accounting Policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Dr. Reddy’s Laboratories (EU) Limited 357
Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
k) Income-tax expense
Income tax expense comprises current tax and deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and thecorresponding deferred tax liabilities or assets are recognised using the tax rates that havebeen enacted or substantially enacted by the balance sheet date. Deferred tax assets arerecognised only to the extent there is reasonable certainty that the assets can be realised infuture; however, where there is unabsorbed depreciation or carry forward of losses, deferredtax assets are recognised only if there is a virtual certainty of realisations of such assets.Deferred tax assets are reviewed as at each balance sheet date and written-down or written-upto reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.
Deferred tax assets and liabilities are offset where the Company has a legally enforceable rightto set-off assets against liabilities representing current tax, and where such assets and liabilitiesrelate to taxes on income levied by the same governing taxation laws.
l) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Notes to Financial Statements
Note 1: Significant Accounting Policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Dr. Reddy’s Laboratories (EU) Limited 358
Notes to Financial Statements
Note 2 : Notes to financial statements
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised20,000,000 (previous year 20,000,000) shares of GBP 1 each 15,833 15,833
Issued9,131,928 (previous year 9,131,928) shares of GBP 1 each 7,230 7,231
Subscribed and paid-up9,131,928 (previous year 9,131,928) shares of GBP 1 each 7,230 7,231
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 9,133,290 7,231 9,133,290 7,231Less: Buy back of shares during the year (1,362) (1) - -
Number of shares outstandingat the end of the year 9,131,928 7,230 9,133,290 7,231
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of GBP 1 per share. Eachholder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars No. of % holding No. of % holding
shares in the class shares in the class
Dr. Reddy’s Laboratories SA 9,131,928 100 9,131,928 99.99
(d) Aggregate number of shares bought back during the period of five years immediatelypreceding the reporting date. (Number of shares)
Particulars As at As at As at As at As at31 Mar 2013 31 Mar 2012 31 Mar 2011 31 Mar 2010 31 Mar 2009
Ordinary shares of 1,362 - - - -GBP 1 each
Dr. Reddy’s Laboratories (EU) Limited 359
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year 1,627 205Additions / (deductions) during the year (11) 1,422
1,616 1,627SurplusBalance at the beginning of the year 8,107 3,992Less: Buy back of shares (7,452) -Add: Current year profit 3,556 4,115Balance carried forward 4,211 8,107
5,827 9,734
2.3 : Long term borrowingsBorrowings from holding company and other group companies 7,177 7,113
7,177 7,113
2.4 : Trade PayablesPayables to holding company and other group companies 563 211Payables to others 45 89
608 300
2.5 Other current liabilitiesDue to capital creditors 66 181Accrued expenses 483 482Sales and use tax payable 329 298Other current liabilities 571 903
1,449 1,864
2.6 : Short term provisionsIncome tax payable 449 648
449 648
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Dr. R
eddy’s Laboratories (EU
) Limited
360
Notes to F
inancial Statem
ents2.7 : Fixed assets (All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Gross Block Depreciation / Amortisation Net Block
Description As at Additions Deletions Forex As at As at For the Deletions Forex As at As at As at
01.4.2012 31.3.2013 01.4.2012 year 31.3.2013 31.3.2013 31.3.2012
Land 570 - - 5 575 - - - - - 575 570
Building 977 95 - 5 1,077 291 83 - (1) 373 704 686
Plant & Machinery 5,944 1,768 - (21) 7,691 2,211 695 - (10) 2,896 4,795 3,733
Computers 80 1 - 1 82 65 11 - - 76 6 15
Total Tangible Assets (A) 7,571 1,863 - (10) 9,425 2,567 789 - (11) 3,345 6,080 5,004
Goodwill 1,203 - - 7 1,210 725 80 - (1) 804 406 478
Intangibles 3,307 - - 35 3,342 3,307 - - 35 3,342 - -
Total Intangible Assets (B) 4,510 - - 42 4,552 4,032 80 - 34 4,146 406 478
TOTAL (A+B) 12,081 1,863 - 32 13,977 6,598 869 - 23 7,491 6,486 5,482
Previous year 10,559 636 - 886 12,081 5,201 654 - 743 6,598 5,482
Note 2 : Notes to financial statements (Continued)
Dr. Reddy’s Laboratories (EU) Limited 361
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.8 : Non current investmentsInvestments in Subsidiaries 3,290 3,290Less: Provision for decline, other than temporary,in the value of long term investments - -
3,290 3,290
2.9 : Long term loans and advances(Unsecured)Considered goodLoan to holding company and other group companies - 186Security Deposits 3 1
3 187
2.10 : Inventories(Valued on weighted average basis)Raw materials 150 148Work-in-progress 708 -Finished goods 487 755Packing materials 22 -
1,367 903
2.11 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months - -Other debts Considered good 734 745Receivables from holding company and other group companies 8,107 7,888
8,841 8,633Less: Provision for doubtful debts - -
8,841 8,633
2.12 : Cash and bank balancesCash on hand - -Bank balances In current accounts 1,816 2,308 In term deposit accounts - 3,584
1,816 5,892
Dr. Reddy’s Laboratories (EU) Limited 362
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.13 : Short term loans and advances(Unsecured)Considered goodAdvances to material suppliers - 1Balances with Statutory Agencies 133 287Prepaid expenses 52 134
185 422
2.14 : Other current assetsConsidered goodAdvances to holding company and other group companies 43 4Interest Receivable - 6Other current assets 474 471
517 481
Dr. Reddy’s Laboratories (EU) Limited 363
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.15 : Other operating revenueRoyalty income 544 568Miscellaneous income 875 689
1,419 1,257
2.16 : Other incomeInterest income 32 28
32 28
2.17 : Changes in inventories of finished goods,work-in-progress and stock-in-tradeOpeningFinished goods 755 1,017
ClosingWork-in-progress 708 -Finished goods 487 755
Net (increase) / decrease (440) 262
2.18 : Employee benefits expenseSalaries, wages and bonus 2,841 2,209Staff welfare expenses 72 41
2,913 2,250
2.19 : Finance costsInterest Expenses 206 195
206 195
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Dr. Reddy’s Laboratories (EU) Limited 364
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.20 : Other expenseConsumption of Stores and spare parts 68 31Legal and professional 141 143Carriage outward 91 80Rates and taxes 116 85Other selling expenses 390 375Repairs and maintenance Buildings 29 21 Plant and machinery 196 185 Others 653 524Power and fuel 655 483Travelling and conveyance 37 32Communication 25 15Rent 68 50Insurance 88 68Foriegn exchange loss, net 79 99Printing and stationery 20 13Bank charges 11 10Auditors’ remuneration Audit fees 3 4Miscellaneous 63 10
2,733 2,228
2.21 : Deferred taxation
Deferred tax asset, net included in the balance sheet comprises the following:
Particulars As at As at31 March 2013 31 March 2012
Deferred tax Assets / (liabilities)Inventories 216 214Other Current Assets (16) 31Fixed assets 18 (64)Other current liabilities - (47)
Deferred Tax Asset, net 218 134
2.22 : Commitments and contingent liabilities
There were no commitments / contingent liabilities as on 31 March 2013 (Previous year: ` 35).
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Dr. Reddy’s Laboratories (EU) Limited 365
2.23 : Related Party Disclosures:
The company has the following amount due to/from related parties :
Particulars As at As at31 March 2013 31 March 2012
i. Due from related parties (included in advances):Dr. Reddy’s Laboratories (UK) Ltd. - 186
ii. Due from related parties (included in Trade receivables):Chirotech Technology Limited 7,960 6,641Dr. Reddy’s Laboratories Limited 23 6Dr. Reddys Laboratories SA 124 701Dr. Reddys Laboratories Inc. - 540
iii. Due to related parties (included in Long Term Borrowings):Dr. Reddys Laboratories SA 7,177 7,113
iv. Due to related parties (included in Trade Payables):Dr. Reddy’s Laboratories Limited 23 -Chirotech Technology Limited 540 211
v. Due from related parties (included in Other Current Assets):Dr. Reddy’s Laboratories Limited - 4Industrias Quimicas Falcon de Mexico, S.A. de CV 43 -
2.24: During the year, the Company bought back its own shares (1,362 shares) from Dr. Reddy'sLaboratories Limited, India on 26 March 2013.
2.25: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.26: The Company, incorporated in United Kingdom, is a 100% subsidiary of Dr. Reddy’s LaboratoriesSA.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy V V ParsuramPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Dr. Reddy’s Laboratories (UK) Limited 366
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Lakhs)
Particulars 31 March 2013 31 March 2012
Profit for the period after taxation 1,530 1,667Balance brought forward 5,571 3,904Balance carried forward to Balance Sheet 7,101 5,571
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of profit of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Satish Reddy M V NarasimhamDirector Director
Place : HyderabadDate : 10 May 2013
DIRECTORS’ REPORT
Dr. Reddy’s Laboratories (UK) Limited 367
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Dr. Reddy’s Laboratories (UK) Limited .,a company incorporated and administered outside India, which comprise the Balance Sheet as at 31March 2013, and the Statement of Profit and Loss for the year ended, and a summary of significantaccounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Dr. Reddy’s Laboratories (UK) Limited 368
b. In our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Dr. Reddy’s Laboratories (UK) Limited 369
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 1 1Reserves and surplus 2.2 7,686 6,026
7,687 6,027Non current liabilitiesLong term borrowings 2.3 2 187Other long term liabilities 2.4 576 773
578 960Current liabilitiesTrade payables 2.5 1,056 2,655Other current liabilities 2.4 1,772 1,728Short term provisions 2.6 237 223
3,065 4,606
TOTAL 11,330 11,594ASSETSNon current assetsFixed assets Tangible assets 2.7 1,922 2,158Deferred tax assets, net 2.17 8 6
1,930 2,164Current assetsInventories 2.8 537 2,513Trade receivables 2.9 5,508 4,763Cash and bank balances 2.10 3,090 1,666Short term loans and advances 2.11 261 488Other current assets 2.12 4 -
9,400 9,430
TOTAL 11,330 11,594Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy M V NarasimhamPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Dr. Reddy’s Laboratories (UK) Limited 370
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeSales, net 21,676 26,632Service income 5 -License fees 463 693Other operating revenues 13 3
Revenue from operations 22,157 27,328Other income 2.13 1 32
Total revenue 22,158 27,360
ExpensesCost of material consumed(including packing material consumed) 10,816 17,282Purchase of stock-in-trade (traded goods) 146 532Changes in inventories of finished goods,work-in-progress and Stock-in-trade 2.14 1,951 (585)Employee benefits expense 2.15 3,493 3,840Depreciation and amortization expense 2.7 341 368Other expenses 2.16 3,697 3,691
Total expenses 20,444 25,128
Profit before tax 1,714 2,232Tax expense Current tax 185 548 Deferred tax (1) 17
Profit for the year 1,530 1,667
Significant accounting policies 1
Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy M V NarasimhamPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Dr. Reddy’s Laboratories (UK) Limited 371
Note 1: Significant accounting policies
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act 1956, other pronouncements of Institute of Chartered Accountants of India andprovisions of Companies Act 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
Dr. Reddy’s Laboratories (UK) Limited 372
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intendeduse, as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of fixed assets are givenbelow:
YearsBuildings Factory and administrative buildings 20 to 50Plant and machinery 3 to 15Electrical equipment 5 to 15Laboratory equipment 4 to 10Furniture, fixtures and office equipment 3 to 5Computer equipment 3
Tenants improvements are amortised over the primary period of lease.
e) Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value (NRV)is the estimated selling price in the ordinary course of the business, less the estimated costs ofcompletion and the estimated costs necessary to make the sale. Cost of inventories comprisesall cost of purchase, cost of conversion and other costs incurred in bringing the inventories totheir present location and condition.
The cost of all categories of inventory is determined using weighted average cost method.
f) Retirement benefits
Contributions payable to employees, pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
Note 1: Significant accounting policies (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Dr. Reddy’s Laboratories (UK) Limited 373
g) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
h) Revenue recognition
Sale of goods
Revenue is recognized when the significant risks and rewards of ownership have been transferredto the buyer, recovery of the consideration is probable, the associated costs and possiblereturn of goods can be estimated reliably, there is no continuing management involvement withthe goods and the amount of revenue can be measured reliably. Revenue from the sale ofgoods is measured at the fair value of the consideration received or receivable, net of returns,sales tax and applicable trade discounts and allowances. Revenue includes shipping andhandling costs billed to the customer.
License fee
The Company enters into certain dossier sales, licensing and supply arrangements with variousparties. Some of these arrangements include certain performance obligations by the Company.Revenue from such arrangements is recognized in the period in which the Company completesall its performance obligations.
Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
i) Income tax expense
Income tax expense comprises current tax and deferred tax charge or credit.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and thecorresponding deferred tax liabilities or assets are recognised using the tax rates that havebeen enacted or substantially enacted by the balance sheet date. Deferred tax assets arerecognised only to the extent there is reasonable certainty that the assets can be realised infuture; however, where there is unabsorbed depreciation or carry forward of losses, deferredtax assets are recognised only if there is a virtual certainty of realisations of such assets.
Note 1: Significant accounting policies (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Dr. Reddy’s Laboratories (UK) Limited 374
Deferred tax assets are reviewed as at each balance sheet date and written-down or written-upto reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.
Deferred tax assets and liabilities are offset where the Company has a legally enforceable rightto set-off assets against liabilities representing current tax, and where such assets and liabilitiesrelate to taxes on income levied by the same governing taxation laws.
j) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Note 1: Significant accounting policies (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Dr. Reddy’s Laboratories (UK) Limited 375
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised1,000 (previous year 1,000) Equity shares of GBP 1 each 1 1
Issued1,000 (previous year 1,000) Equity shares of GBP 1 each 1 1
Subscribed and paid-up1,000 (previous year 1,000) Equity shares of GBP 1 each 1 1
1 1
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 1,000 1 1,000 1Add: Share issued during the year - - - -
Number of shares outstandingat the end of the year 1,000 1 1,000 1
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of GBP 1 per share. Eachholder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars No. of Equity % equity No. of Equity % equity
shares held shares held shares held shares held
Dr. Reddy’s Laboratories 1,000 100 1,000 100(EU) Limited
Notes to Financial Statements
Note 2 : Notes to financial statements
Dr. Reddy’s Laboratories (UK) Limited 376
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year 456 286Additions / (deductions) during the year 129 170
585 456SurplusBalance at the beginning of the year 5,571 3,904Add: Current year profit 1,530 1,667
Balance carried forward 7,101 5,571
7,686 6,026
2.3 : Long term borrowingsBorrowings from holding company and other group companies 2 187
2 187
2.4 : Other liabilitiesa) Other long term liabilities
Deferred revenue - non current 576 773
576 773b) Other current liabilities
Due to capital creditors 278 272Salary and Bonus payable 224 314Due to statutory authorities 73 90Other current liabilities 1,197 1,052
1,772 1,728
2.5 : Trade PayablesPayables to holding company and other group companies 798 1,891Payables to others 258 764
1,056 2,655
2.6 : Short term provisionsIncome tax payable 201 223Other Provisions Allowance for sales returns 36 -
237 223
Dr. R
eddy’s Laboratories (UK
) Limited
377
Notes to F
inancial Statem
ents
Note 2 : Notes to financial statements (Continued)
2.7 : Fixed assets (All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Gross Block Depreciation / Amortisation Net Block
Description As at Addition Deletions Forex As at As at For the Deletions Forex As at As at As at
01.04.2012 31.03.13 01.04.2012 Year 31.03.2013 31.03.2013 31.03.2012
Land 152 - - - 152 - - - - - 152 152Building 1,392 - - - 1,392 272 56 - - 328 1,064 1,120Plant & Machinery 1,993 62 27 - 2,028 1,200 206 27 - 1,379 650 793Tenants improvements 173 - - - 173 163 - - - 163 9 9Furniture, Fixtures & 210 2 46 - 167 150 39 31 - 158 9 60Office EquipmentsComputers 221 55 - - 275 197 40 - - 237 38 23
Total Tangible Assets (A) 4,141 119 73 - 4,186 1,982 341 59 - 2,265 1,922 2,158
Intangibles 389 - - - 389 389 - - - 389 - -
Total Intangible 389 - - - 389 389 - - - 389 - -Assets (B)
TOTAL (A+B) 4,529 119 73 - 4,575 2,371 341 59 - 2,653 1,922 2,158
Previous year 4,454 94 19 - 4,529 2,007 368 4 - 2,371 2,158
Dr. Reddy’s Laboratories (UK) Limited 378
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.8 : Inventories(Valued on weighted average basis)Raw materials 5 3Work-in-progress 10 709Finished goods 333 1,015Stock-in-trade (in respect of goods acquired for trading) - 570Packing materials 189 216
537 2,513
2.9 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months Considered good 69 - Considered doubtful 6 53Other debts Considered good 5,439 4,763
5,514 4,816Less: Provision for doubtful debts (6) (53)
5,508 4,763
2.10 : Cash and bank balancesCash on hand 1 2Bank balances In current accounts 3,089 1,664
3,090 1,666
2.11 : Short term loans and advances(Unsecured)Considered goodAdvances to material suppliers - 29Balances with Statutory Agencies 245 389Prepaid expenses 16 70
261 488
2.12 : Other current assetsConsidered goodOther receivables from holding companyand other group companies 4 -
4 -
Dr. Reddy’s Laboratories (UK) Limited 379
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
For the year ended For the year endedParticulars 31 March 2013 31 March 2012
2.13 : Other incomeInterest income 1 3Profit on sale of fixed assets, net - 2Forign exchange gain, net - 27
1 32
2.14 : Changes in inventories of finished goods,work in progress and stock in tradeNet (increase) / decrease in stockOpening
Work-in-process 709 151Finished goods 1,015 992Stock in trade 570 2,294 566 1,709
ClosingWork-in-process 10 709Finished goods 333 1,015Stock in trade - 343 570 2,294
Net (increase) 1,951 (585)
2.15 : Employee benefits expenseSalaries, wages and bonus 3,428 3,744Staff welfare expenses 65 96
3,493 3,840
Dr. Reddy’s Laboratories (UK) Limited 380
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
For the year ended For the year endedParticulars 31 March 2013 31 March 2012
2.16 : Other expenseLegal and professional 1,736 1,196Carriage outward 315 227Rates and taxes 289 44Commision on Sales 75 168Other selling expenses 114 218Repairs and maintenance Plant and machinery 75 70 Others 119 281Power and fuel 48 34Travelling and conveyance 291 317Communication 118 128Rent 240 481Consumption of Stores and spare parts - 258Insurance 81 67Foreign exchange loss, net 89 -Printing and stationery 45 54Bank charges 8 8Advertisements 8 8Miscellaneous 46 131
3,697 3,691
2.17 : Deferred taxation
Deferred tax asset, net included in the balance sheet comprises the following:
Particulars As at As at31 March 2013 31 March 2012
Deferred tax Asset/(Liability)Trade receivables 5 (3)Provisions (23) (23)Inventory (9) (9)Others Current Assets (165) (165)Current Liabilities (38) (42)Fixed assets 238 247
Deferred tax asset, net 8 6
Dr. Reddy’s Laboratories (UK) Limited 381
2.18: Related party disclosures
The Company has following amounts due from/to related parties:
Particulars As at As at31 March 2013 31 March 2012
i. Due to related parties (included in Trade Payables)Dr. Reddy’s Laboratories Ltd. 798 1,891
ii. Due to related parties(included in Long term borrowings):Dr. Reddy’s Laboratories (EU) Ltd. 2 187
iii. Due from related parties(included in other current assets):Dr. Reddy’s Laboratories Ltd. 4 -
2.19: Commitments and contingent liabilities
There were no commitments and contingent liabilities as at 31 March 2013 (previous year: Nil).
2.20: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to confirm tocurrent year’s classification.
2.21: The Company, incorporated in United Kingdom, is a 100% subsidiary of Dr. Reddy’s Laboratories(EU) Limited.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy M V NarasimhamPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Dr. Reddy’s Laboratories ILAC TICARET 382
Dear Members,
Your Directors present this report of the Company for the period from 1 April 2012 to 4 December2012. The Company was sold on 4 December 2012.
Financial Highlights
The following table gives the financial highlights of the Company for the period from 1 April 2012 to 4December 2012 as compared to previous financial year:
(` in thousands)
Particulars 01 April 2012 - 01 April 2011 -04 December 2012 31 March 2012
Loss for the period after taxation (55) (1)Balance brought forward (106) (105)Deficiency transferred to Share Capital 161 -Balance carried forward to Balance Sheet - (106)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company for the period ended 4 December 2012 and of loss of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Manishmukund JoshiPlace : Hyderabad DirectorDate : 04 December 2012
DIRECTORS’ REPORT
Dr. Reddy’s Laboratories ILAC TICARET 383
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Dr. Reddy’s Laboratories ILAC TICARETLimited SIRKETI LLC, a company incorporated and administered outside India, which comprise theBalance Sheet as at 04 December 2012, and the Statement of Profit and Loss for the period from 1April 2012 to 4 December 2012 and a summary of significant accounting policies and other explanatoryinformation.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 4 December 2012;and
(b) in the case of the Statement of Profit and Loss, of the loss for the period from 1 April 2012 to 4December 2012; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Dr. Reddy’s Laboratories ILAC TICARET 384
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 04 December 2012
Dr. Reddy’s Laboratories ILAC TICARET 385
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 04 Dec. 2012 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 - 162Reserves and surplus 2.2 - (106)
- 56
TOTAL - 56
ASSETSCurrent assetsCash and bank balances 2.3 - 56
- 56
TOTAL - 56
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Manishmukund JoshiPartner DirectorMembership No. 9750
Place : HyderabadDate : 04 December 2012
Balance Sheet
Dr. Reddy’s Laboratories ILAC TICARET 386
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the period For the periodParticulars Note 1st April 2012- 01 April 2011 -
4 December 2012 31 March 2011
IncomeOther income 2.4 4 -
Total revenue 4 -
ExpensesOther expenses 2.5 60 1
Total expenses 60 1
Profit / (Loss) before tax (56) (1)Tax expense Current tax - - Deferred tax - -
Profit / (Loss) for the period (56) (1)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Manishmukund JoshiPartner DirectorMembership No. 9750
Place : HyderabadDate : 04 December 2012
Statement of Profit and Loss
Dr. Reddy’s Laboratories ILAC TICARET 387
Note 1: Significant accounting policies
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act, 1956, other pronouncements of Institute of Chartered Accountants of Indiaand provisions of Companies Act, 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
During the current year the Board of directors of the Company resolved to dispose the entityand consequently, on 4 December 2012 the outstanding equity shares in the Company weresold to a third party.
b) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Notes to Financial Statements
Dr. Reddy’s Laboratories ILAC TICARET 388
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 4 December 2012 31 March 2012
2.1 : Share capitalAuthorisedNil (previous year: TRL 5,000)* - 162
IssuedNil (previous year: TRL 5,000)* - 162
Subscribed and paid-upTRL 5,000* 162 162Less : Balance in surplus account transferred toShare capital on sale of entity (162) -
Nil (previous year: TRL 5,000)* - 162*No concept of nature and number of sharesin this company
2.2 : Reserves and surplusDeficitBalance at the beginning of the year (106) (105)Add: Current period loss (56) (1)Add: Transferred to Share capital on sale of entity 162 -
- (106)
2.3 : Cash and bank balancesCash on hand - -Bank balances In current accounts - 56
- 56
Notes to Financial Statements
Note 2 : Notes to financial statements
Dr. Reddy’s Laboratories ILAC TICARET 389
For the period For the periodParticulars 01 April 2012 - 01 April 2011 -
4 December 2012 31 March 2012
2.4 : Other incomeForeign exchange gain, net 4 -
4 -
2.5 : Other expenseForeign exchange loss, net - 1Other general expenses 60 -
60 1
2.6: All of the equity shares in the Company were sold on 4 December 2012.
2.7: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Manishmukund JoshiPartner DirectorMembership No. 9750
Place : HyderabadDate : 04 December 2012
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Dr. Reddy’s Laboratories Louisiana LLC 390
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Lakhs)
Particulars 31 March 2013 31 March 2012
Profit for the period after taxation 18,239 6,720Balance brought forward (2,370) (9,090)Balance carried forward to Balance Sheet 15,869 (2,370)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of profit of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of this Act for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place : Hyderabad G V Prasad Satish ReddyDate : 10 May 2013 Director Director
DIRECTORS’ REPORT
Dr. Reddy’s Laboratories Louisiana LLC 391
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Dr. Reddy’s Laboratories LouisianaLLC, a company incorporated and administered outside India, which comprise the Balance Sheet asat 31 March 2013, and the Statement of Profit and Loss for the year ended, and a summary ofsignificant accounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Dr. Reddy’s Laboratories Louisiana LLC 392
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A.Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A.Ramachandra RaoPlace : Hyderabad PartnerDate : 10 May 2013 Membership No: 9750
Dr. Reddy’s Laboratories Louisiana LLC 393
(All amounts in Indian Rupees Lakhs except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital - -Reserves and surplus 2.1 36,387 17,086
36,387 17,086Current liabilitiesTrade payables 2.2 2,062 2,225Other current liabilities 2.3 2,370 7,311
4,432 9,536
TOTAL 40,819 26,622ASSETSNon current assetsFixed assets Tangible assets 2.4 12,185 9,789 Intangible assets 2.4 2,412 2,611 Capital work-in-progress 3,273 4,324Long term loans and advances 2.5 73 25
17,943 16,750Current assetsInventories 2.6 5,256 4,394Trade receivables 2.7 16,134 4,902Cash and bank balances 2.8 1,232 475Short term loans and advances 2.9 243 99Other current assets 2.10 11 2
22,876 9,872
TOTAL 40,819 26,622Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao G V Prasad Satish ReddyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Dr. Reddy’s Laboratories Louisiana LLC 394
(All amounts in Indian Rupees Lakhs except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeSales, net 50,651 35,267Other operating revenues 7 6
Revenue from operations 50,658 35,272Other income 2.11 - 11
Total revenue 50,658 35,283
ExpensesCost of material consumed(including packing material consumed) 14,762 14,979Changes in inventories of finished goods,work-in-progress and Stock-in-trade 2.12 4 106Conversion charges 17 118Employee benefits expense 2.13 10,965 8,688Depreciation and amortization expense 2.4 1,570 1,296Other expenses 2.14 5,102 3,376
Total expenses 32,419 28,563
Profit before tax 18,239 6,720Tax expense 2.17 Current tax - - Deferred tax - -
Profit for the year 18,239 6,720
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao G V Prasad Satish ReddyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Dr. Reddy’s Laboratories Louisiana LLC 395
Note 1: Significant Accounting Policies(All amounts in Indian Rupees Lakhs except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under Section 211(3C) ofCompanies Act, 1956, other pronouncements of Institute of Chartered Accountants of Indiaand provisions of Companies Act, 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with Section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option of
Notes to Financial Statements
Dr. Reddy’s Laboratories Louisiana LLC 396
the counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intendeduse, as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of tangible fixed assets aregiven below:
YearsBuildings Factory and administrative buildings 20 to 50
Ancillary structures 3 to 15
Plant and machinery 3 to 15
Electrical equipment 5 to 15
Laboratory equipment 4 to 10
Furniture, fixtures and office equipment (other than computer equipment) 3 to 5
Computer equipment 3
Vehicles 3 to 5
e) Intangible assets and amortisation
Intangible assets are recorded at the consideration paid for acquisition including any importduties and other taxes (other than those subsequently recoverable by the enterprise from thetaxing authorities), and any directly attributable expenditure on making the asset ready for itsintended use.
Intangible assets are amortised on a systematic basis over the best estimate of their usefullives, commencing from the date the asset is available to the Company for its use.
Notes to Financial Statements
Note 1: Significant Accounting Policies (continued)(All amounts in Indian Rupees Lakhs except share data and where otherwise stated)
Dr. Reddy’s Laboratories Louisiana LLC 397
The management’s estimates of the useful lives for various categories of intangible assets areas follows:
YearsGoodwill 5 to 20Patents, trademarks, etc. (including marketing/ distribution rights) 3 to 16Customer related intangibles 2 to 11Technology related intangibles 3 to 13
f) Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value (NRV)is the estimated selling price in the ordinary course of the business, less the estimated costs ofcompletion and the estimated costs necessary to make the sale. Cost of inventories comprisesall cost of purchase, cost of conversion and other costs incurred in bringing the inventories totheir present location and condition.
The cost of all categories of inventory is determined using weighted average cost method.
g) Retirement benefits
Contributions payable to employees, pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
h) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the datesof the respective transactions. Exchange differences arising on foreign currency transactionssettled during the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
i) Revenue recognition
Sale of goods
Revenue is recognized when the significant risks and rewards of ownership have been transferredto the buyer, recovery of the consideration is probable, the associated costs and possiblereturn of goods can be estimated reliably, there is no continuing management involvement withthe goods and the amount of revenue can be measured reliably. Revenue from the sale ofgoods is measured at the fair value of the consideration received or receivable, net of returns,sales tax and applicable trade discounts and allowances. Revenue includes shipping andhandling costs billed to the customer.
Notes to Financial Statements
Note 1: Significant Accounting Policies (continued)(All amounts in Indian Rupees Lakhs except share data and where otherwise stated)
Dr. Reddy’s Laboratories Louisiana LLC 398
j) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
k) Government grants
The Company recognizes government grants only when there is reasonable assurance thatthe conditions attached to them will be complied with, and the grants will be received. Governmentgrants received in relation to assets are presented as a reduction to the carrying amount of therelated asset. Revenue Grants are deducted in reporting the related expense.
Notes to Financial Statements
Note 1: Significant Accounting Policies (continued)(All amounts in Indian Rupees Lakhs except share data and where otherwise stated)
Dr. Reddy’s Laboratories Louisiana LLC 399
(All amounts in Indian Rupees Lakhs except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the yea 3,252 2,074Additions / (deductions) during the year 1,062 1,178
4,314 3,252
Securities premium reserveBalance at the beginning of the year 16,204 16,204Additions / (deductions) during the year - -
16,204 16,204
Surplus / (Deficit)Balance at the beginning of the year (2,370) (9,090)Add: Current year profit 18,239 6,720
Balance carried forward 15,869 (2,370)
36,387 17,086
2.2 : Trade PayablesPayables to holding company and other group companies 978 909Payables to others 1,084 1,316
2,062 2,225
2.3 : Other liabilitiesDue to capital creditors 437 449Due to holding company and other group companies - 4,959Accrued expenses 1,702 1,829Other current liabilities 231 74
2,370 7,311
Notes to Financial Statements
Note 2 : Notes to financial statements
Dr. R
eddy’s Laboratories Louisiana LLC400
Notes to F
inancial Statem
ents
2.4 : Fixed assets (All amounts in Indian Rupees Lakhs except share data and where otherwise stated)
Gross Block Depreciation / Amortisation Net Block
Description As at Addition Deletions Forex As at As at For the Deletions Forex As at As at As at
01.04.2012 31.03.2013 1.04.2012 Year 31.03.2013 31.03.2013 31.03.2012
Land 351 - - 24 375 - - - - - 375 351
Building 4,877 100 - 327 5,304 686 210 - 45 941 4,363 4,191
Plant & Machinery 6,293 2,085 12 416 8,782 1,877 665 3 124 2,663 6,119 4,416
Electrical Equipment 357 193 - 23 573 20 38 - 1 59 514 338
Lab Equipment 150 285 - 9 444 11 32 - 1 44 400 138
Office equipment 7 67 8 - 66 1 1 - - 2 64 6
Furniture, Fixtures 466 69 9 31 557 170 58 4 11 235 322 297
Vehicles 2 - - - 2 - 1 - - 1 1 2
Computers 147 - 23 10 143 97 18 9 1 107 27 50
Total Tangible Assets (A) 12,650 2,799 52 840 16,237 2,861 1,023 16 183 4,052 12,185 9,789
Customer contract 4,070 - - 273 4,343 3,573 125 - 233 3,931 412 497
Goodwill 1,924 - - 129 2,053 748 206 - 50 1,004 1,049 1,176
Patents, Trademarks 254 - - 17 271 254 - - 17 271 - -
Intangibles (others) 1,730 171 - 116 2,017 792 216 - 58 1,066 951 938
Total Intangible Assets (B) 7,978 171 - 535 8,684 5,367 547 - 358 6,272 2,412 2,611
TOTAL (A+B) 20,629 2,970 52 3,175 24,921 8,228 1,570 16 541 10,324 14,597 12,401
Previous year 16,517 - 347 2,326 20,629 6,037 1,296 28 923 8,228 12,401
Note 2 : Notes to financial statements (Continued)
Dr. Reddy’s Laboratories Louisiana LLC 401
(All amounts in Indian Rupees Lakhs except share data and where otherwise stated)
Particulars As at As at31 March 2013 31 March 2012
2.5 : Long term loans and advances(Unsecured)Considered goodCapital advances for purchase of fixed assets 73 25
73 25
2.6 : Inventories(Valued on weighted average basis)Raw materials 2,389 1,618Work-in-progress 1,103 1,057Finished goods 908 958Stores and spares 534 453Packing materials 322 307
5,256 4,394
2.7 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months Considered good Considered doubtful - 11Other debts Considered good 4,504 4,902Receivables from holding companyand other group companies 11,630 -
16,134 4,913Less: Provision for doubtful debts - (11)
16,134 4,902
2.8 : Cash and bank balancesCash on hand - -Bank balances In current accounts 1,232 475
1,232 475
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Dr. Reddy’s Laboratories Louisiana LLC 402
(All amounts in Indian Rupees Lakhs except share data and where otherwise stated)
Particulars As at As at31 March 2013 31 March 2012
2.9 : Short term loans and advances(Unsecured)Considered goodAdvances to material suppliers 16 20Staff loans and advances 1 -Prepaid expenses 87 7Other Advances 139 72Considered doubtfulOther advances recoverable in cash orin kind or for value to be received 14 1
257 100Less: Provision for doubtful loans and advances (14) (1)
243 99
2.10 : Other current assetsConsidered goodOther receivables from holding companyand other group companies 11 2
11 2
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Dr. Reddy’s Laboratories Louisiana LLC 403
(All amounts in Indian Rupees Lakhs except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.11 : Other incomeProfit on sale of fixed assets, net - 11
- 11
2.12 : Changes in inventories of finished goods,work in progress and stock in tradeNet (increase) / decrease in stockOpeningWork-in-process 1,057 1,632Finished goods 958 2,015 488 2,120ClosingWork-in-process 1,103 1,057Finished goods 908 2,011 958 2,015
Net (increase) 4 106
2.13 : Employee benefits expenseSalaries, wages and bonus 10,342 7,897Contribution to provident and other funds 317 523Staff welfare expenses 306 268
10,965 8,688
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Dr. Reddy’s Laboratories Louisiana LLC 404
(All amounts in Indian Rupees Lakhs except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.14 : Other expenseConsumption of Stores and spare parts 1,262 418Legal and professional 283 32Carriage outward 123 160Rates and taxes 492 324Other selling expenses 1 2Repairs and maintenance Plant and machinery 1,030 715 Others 707 718Power and fuel 623 547Travelling and conveyance 151 110Communication 59 60Rent 9 -Insurance 176 130Provision - Advances & Debtors 12 -Donations 4 3Printing and stationery 78 41Bank charges 1 -Loss on sale of fixed assets, net 14 -Auditors’ remuneration Audit fees 1 1Advertisements 1 1Miscellaneous 75 113
5,102 3,376
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Dr. Reddy’s Laboratories Louisiana LLC 405
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs except share data and where otherwise stated)
2.15. Related party disclosures
The Company has following amounts due from/ to related parties:
Particulars As at As at31 March 2013 31 March 2012
i. Due from related parties(included in Other Current Assets )Dr. Reddy’s Laboratories Limited - 2Dr. Reddy’s Laboratories Tennessee, LLC 11 -
ii. Due to related parties(included in Other Current Liabilities)Dr. Reddy’s Laboratories Inc. - 4,959
iii. Due from related parties(included in Trade receivables)Dr. Reddy’s Laboratories Inc. 11,630 -
iv. Due to related parties(included in Trade Payables)Dr. Reddy’s Laboratories Limited 978 909
2.16. Commitments and contingent liabilities
Loss contingencies arising from claims, litigations, assessments, fines, penalties etc. are providedfor when it is probable that a liability may be incurred, and the amount can be reasonablyestimated.
Particulars As at As at31 March 2013 31 March 2012
Estimated amount of contracts remaining to beExecuted on capital account and not provided 602* 790*for (net of advances)
(*The above amounts of capital commitments are net of advances).
2.17. The tax expense for the Company is computed and presented together with the parentCompany's (Dr. Reddy's Laboratories Inc.) financial as per the tax laws of United States.
Dr. Reddy’s Laboratories Louisiana LLC 406
2.18. Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.19. The Company, incorporated in USA, is a wholly owned subsidiary of Dr. Reddy’s LaboratoriesInc.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao G V Prasad Satish ReddyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs except share data and where otherwise stated)
Dr Reddy’s Laboratories SA 407
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Lakhs)
Particulars 31 March 2013 31 March 2012
Profit for the period after taxation 66,700 44,006Balance brought forward 123,285 79,279Balance carried forward to Balance Sheet 189,985 123,285
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of profit of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place : Hyderabad Satish Reddy De Ve RaymondDate : 10 May 2013 Director Director
DIRECTORS’ REPORT
Dr Reddy’s Laboratories SA 408
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Dr. Reddy’s Laboratories SA, a companyincorporated and administered outside India, which comprise the Balance Sheet as at 31 March2013, and the Statement of Profit and Loss for the year ended, and a summary of significant accountingpolicies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Dr Reddy’s Laboratories SA 409
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Dr Reddy’s Laboratories SA 410
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars Note31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 29,512 29,512Reserves and surplus 2.2 187,569 125,812
217,081 155,324
Non current liabilitiesLong term borrowings 2.3 118,292 110,326
118,292 110,326Current liabilitiesTrade payables 2.4 18,324 3,797Other current liabilities 2.5 10,880 9,253Short term provisions 2.6 5,561 2,592
34,765 15,642
TOTAL 370,138 281,292ASSETSNon current assetsFixed assets Tangible assets 2.7 166 2 Intangible assets 2.7 1,195 550Non current investments 2.8 58,510 22,447Deferred tax assets, net 2.20 338 -Long term loans and advances 2.9 123,769 111,739
183,978 134,738Current assetsInventories 2.10 990 1,303Trade receivables 2.11 115,327 88,295Cash and bank balances 2.12 66,366 33,957Short term loans and advances 2.13 1,825 1,916Other current assets 2.14 1,652 21,083
186,160 146,554
TOTAL 370,138 281,292
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy De Ve RaymondPartner Director DirectorMembership No. 9750Place : HyderabadDate : 10 May 2013
Balance Sheet
Dr Reddy’s Laboratories SA 411
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeSales, net 186,402 139,585Service income 696 316Other operating revenues 17 -
Revenue from operations 187,115 139,902Other income 2.15 10,295 8,104
Total revenue 197,410 148,006
ExpensesPurchase of stock-in-trade (traded goods) 80,957 54,323Changes in inventories of finished goods,work-in-progress and Stock-in-trade 2.16 313 3,264Provision for other than temporary diminutionin the value of long-term investements - 1,417Conversion charges 8,806 7,412Employee benefits expense 2.17 2,701 8,403Finance costs 2.18 2,614 2,834Depreciation and amortization expense 2.7 95 1Research and development 12,675 356Other expenses 2.19 14,394 21,547
Total expenses 122,555 99,556
Profit before tax 74,855 48,449Tax expense Current tax 8,496 4,444 Deferred tax (341) -
Profit for the year 66,700 44,006Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy De Ve RaymondPartner Director DirectorMembership No. 9750Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Dr Reddy’s Laboratories SA 412
Note 1: Significant accounting policies
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act 1956, other pronouncements of Institute of Chartered Accountants of India andprovisions of Companies Act 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
Dr Reddy’s Laboratories SA 413
Current assets/ liabilities include the current portion of non current financial assets/liabilities respectively. All other assets/ liabilities are classified as non current.
d) Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value (NRV)is the estimated selling price in the ordinary course of the business, less the estimated costs ofcompletion and the estimated costs necessary to make the sale. Cost of inventories comprisesall cost of purchase, cost of conversion and other costs incurred in bringing the inventories totheir present location and condition.
The cost of all categories of inventory is determined using weighted average cost method.
e) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intendeduse, as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of tangible fixed assets aregiven below:
YearsLeasehold improvements 3Computer equipment 3
f) Intangible assets and amortisation
Intangible assets are recorded at the consideration paid for acquisition including any importduties and other taxes (other than those subsequently recoverable by the enterprise from thetaxing authorities), and any directly attributable expenditure on making the asset ready for itsintended use.
Intangible assets are amortised on a systematic basis over the best estimate of their usefullives, commencing from the date the asset is available to the Company for its use.
Note 1: Significant accounting policies (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Dr Reddy’s Laboratories SA 414
Management’s estimates of the useful lives for various categories of intangible assets are asfollows:
YearsIntangibles 3 to 16
g) Investments
Investments that are readily realisable and intended to be held for not more than one year fromthe date of acquisition are classified as current investments. All other investments are classifiedas non current investments.
Non current investments are carried at cost less any other-than-temporary diminution in value,determined separately for each individual investment. The reduction in the carrying amount isreversed when there is a rise in the value of the investment or if the reasons for the reductionno longer exist. Any reduction in the carrying amount and any reversal in such reductions arecharged or credited to the statement of profit and loss.
Current investments are carried at the lower of cost and fair value. The comparison of cost andfair value is done separately in respect of each category of investment.
h) Retirement benefits
Contributions payable to employees, pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
i) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
j) Income-tax expense
Income tax expense comprises current tax and deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and thecorresponding deferred tax liabilities or assets are recognised using the tax rates that havebeen enacted or substantially enacted by the balance sheet date. Deferred tax assets arerecognised only to the extent there is reasonable certainty that the assets can be realised infuture; however, where there is unabsorbed depreciation or carry forward of losses, deferred
Note 1: Significant accounting policies (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Dr Reddy’s Laboratories SA 415
tax assets are recognised only if there is a virtual certainty of realisations of such assets.Deferred tax assets are reviewed as at each balance sheet date and written-down or written-upto reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.
Deferred tax assets and liabilities are offset where the Company has a legally enforceable rightto set-off assets against liabilities representing current tax, and where such assets and liabilitiesrelate to taxes on income levied by the same governing taxation laws.
k) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
l) Revenue recognition
Sale of goods
Revenue is recognized when the significant risks and rewards of ownership have been transferredto the buyer, recovery of the consideration is probable, the associated costs and possiblereturn of goods can be estimated reliably, there is no continuing management involvement withthe goods and the amount of revenue can be measured reliably. Revenue from the sale ofgoods is measured at the fair value of the consideration received or receivable, net of returns,sales tax and applicable trade discounts and allowances. Revenue includes shipping andhandling costs billed to the customer.
Service Income
Revenue from services rendered, which primarily relate to contract research, is recognized inthe statement of profit and loss as the underlying services are performed. Upfront non-refundablepayments received under these arrangements are deferred and recognised as revenue overthe expected period over which the related services are expected to be performed.
Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
m) Reasearch and development
Expenditures on research activities undertaken with the prospect of gaining new scientific ortechnical knowledge and understanding are recognized in the statement of profit and losswhen incurred.
Note 1: Significant accounting policies (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Dr Reddy’s Laboratories SA 416
Development activities involve a plan or design for the production of new or substantially improvedproducts and processes. Development expenditures are capitalized only if:
l Development costs can be measured reliably,
l The product or process is technically and commercially feasible,
l Future economic benefits are probable and ascertainable, and
l The Company intends to and has sufficient resources to complete development and hasthe ability to use or sell the asset.
Expenditure incurred on fixed assets used for research and development is capitalisedand depreciated in accordance with the depreciation policy of the Company.
Note 1: Significant accounting policies (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Dr Reddy’s Laboratories SA 417
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised75,640,410 (previous year 75,640,410) shares of CHF 1 each 29,512 29,512
Issued75,640,410 (previous year 75,640,410) shares of CHF 1 each 29,512 29,512
Subscribed and paid-up75,640,410 (previous year 75,640,410) shares of CHF 1 each 29,512 29,512
29,512 29,512
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 75,640,410 29,512 75,640,410 29,512Add: Share issued during the year - - - -
Number of shares outstandingat the end of the year 75,640,410 29,512 75,640,410 29,512
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of CHF 1 per share. Eachholder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars No. of Equity % equity No. of Equity % equity
shares held shares held shares held shares held
Dr. Reddy’s Laboratories Limited 75,640,410 100 75,640,410 100
Notes to Financial Statements
Note 2 : Notes to financial statements
Dr Reddy’s Laboratories SA 418
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year 8,051 401Additions / (deductions) during the year 2,702 7,650
10,753 8,051Hedging ReserveBalance at the beginning of the year (5,524) 121Additions / (deductions) during the year (7,645) (5,645)
(13,169) (5,524)SurplusBalance at the beginning of the year 123,285 79,279Add: Current year profit 66,700 44,006Balance carried forward 189,985 123,285
187,569 125,812
2.3 : Long term borrowingsSecuredOther Long term borrowings 118,292 110,326
118,292 110,326
2.4 : Trade PayablesPayables to holding company and other group companies 17,688 3,508Payables to others 636 289
18,324 3,797
2.5 : Other current liabilitiesDerivative Financial instrument - Liability 4 -Due to capital creditors 58 -Due to holding company and other group companies 4,295 4,148Interest accrued but not due 38 450Accrued expenses 5,077 4,372Salary and Bonus payable 254 56Due to statutory authorities 48 2Other current liabilities 1,106 225
10,880 9,253
2.6 : Short term provisionsIncome tax payable 5,561 2,592
5,561 2,592
Dr R
eddy’s Laboratories SA
419
Notes to F
inancial Statem
ents
Note 2 : Notes to financial statements (Continued)
2.7 : Fixed assets (All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Gross Block Depreciation / Amortisation Net Block
Description As at Addi- Dele- Forex As at As at For the Deletions Forex As at As at As at01.04.2012 tions tions 31.03.2013 01.04.2012 Year 31.03.2013 31.03.2013 31.03.2012
Leasehold - 155 - - 155 - 33 - - 33 122 -
improvements
Computers 3 51 - - 54 1 9 - - 10 44 2
Total Tangible 3 206 - - 209 1 42 - - 43 166 2
Assets (A)
Intangibles 550 698 - - 1,248 - 53 - - 53 1,195 550
Total Intangible 550 698 - - 1,248 - 53 - - 53 1,195 550
Assets (B)
TOTAL (A+B) 553 904 - - 1,457 1 95 - - 96 1,361 552
Previous year 550 3 - - 553 - 1 - - 1 552
Dr Reddy’s Laboratories SA 420
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.8 : Non current investmentsInvestments in Subsidiaries 59,959 23,896Less: Provision for decline, other than temporary,in the value of long term investments (1,449) (1,449)
58,510 22,4472.9 : Long term loans and advances(Unsecured)Considered goodLoan to holding company and other group companies 123,728 111,695Security Deposits 41 44
123,769 111,7392.10 : Inventories(Valued on weighted average basis)Stock-in-trade (in respect of goods acquired for trading) 990 1,303
990 1,3032.11 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months Considered good 336 - Considered doubtful 199 224Other debts Considered good 30,493 23,061Receivables from holding company and other group companies 84,498 65,234
115,526 88,519Less: Provision for doubtful debts (199) (224)
115,327 88,2952.12 : Cash and bank balancesCash on hand - -Bank balances In current accounts 2,853 3,432 In term deposit accounts (maturity less than 3 months) 6,514 15,263
Cash and cash equivalents (A) 9,367 18,695
In term deposit accounts* 56,999 15,262 *(maturity more than 3 months but less than 12 months)
Other bank balances (B) 56,999 15,262
Total cash and bank balances (A+B) 66,366 33,957
Dr Reddy’s Laboratories SA 421
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.13 : Short term loans and advances(Unsecured)Considered goodAdvances to material suppliers 1,665 1,170Staff loans and advances 4 -Balances with Statutory Agencies 7 4Prepaid expenses 149 151Other Advances - 591
1,825 1,916
2.14 : Other current assetsConsidered goodOther receivables from holding companyand other group companies 678 20,924Derivative Financial Instrument - Asset 127 70Interest Receivable 585 88Other current assets 262 1
1,652 21,083
ParticularsFor the year ended For the year ended
31 March 2013 31 March 2012
2.15 : Other incomeinterest income 5,117 4,637Foreign exchange gain, net 5,178 3,467
10,295 8,104
2.16 : Changes in inventories of finished goods,work in progress and stock in tradeNet (increase) / decrease in stockOpening
Stock in trade 1,303 4,567Closing
Stock in trade 990 1,303
Net decrease/(increase) 313 3,264
Dr Reddy’s Laboratories SA 422
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
ParticularsFor the year ended For the year ended
31 March 2013 31 March 2012
2.17 : Employee benefits expenseSalaries, wages and bonus 2,480 7,941Staff welfare expenses 221 462
2,701 8,403
2.18 : Finance costsInterest Expenses 2,614 2,834
2,614 2,834
2.19 : Other expenseConsumption of Stores and spare parts 137 242Legal and professional 704 860Carriage outward 234 179Rates and taxes - 65Commision on Sales 573 1,481Other selling expenses 1,063 5,063Travelling and conveyance 420 865Communication 73 193Rent 110 443Insurance 353 815Donations - 8Bad debts written-off 259 1Printing and stationery 32 40Bank charges 26 79Auditors’ remuneration Audit fees 19 28Advertisements 174 764Miscellaneous 10,217 10,421
14,394 21,547
Dr Reddy’s Laboratories SA 423
2.20: Deferred taxation
Deferred tax asset, net included in the balance sheet comprises the following:
Particulars As at As at31 March 2013 31 March 2012
Deferred tax assets / (liabilities)Current Liabilities 99 -Fixed Assets 239 -
Deferred Tax Asset, net 338 -
2.21: Commitments and contingent liabilities
There were no commitments or contingent liabilities as at 31 March 2013. (Previous year: Nil)
2.22: Related Party Disclosures:
The company has the following amount due to/from related parties :
Particulars As at As at31 March 2013 31 March 2012
i. Dues from related Parties(included in Advances and other assets)Dr. Reddy’s Laboratories Ltd. 678 20,342Dr. Reddys Pharma Iberia SA - 3,733Dr. Reddy’s Laboratories Inc. - 570Dr. Reddy’s Laboratories (EU) Limited 7,177 7,113Lacock Holdings Limited 103,389 91,231Reddy Holdings GmbH 13,162 9,618Promious Pharma LLC - 12
ii. Due to related parties (included in other liabilities)Dr. Reddy’s Laboratories Ltd. 3,310 3,439OOO Dr. Reddy’s Laboratories Limited 789 709Dr. Reddy’s Laboratories Inc. 182 -Chirotech Technology Limited 14 -
iii. Due from related parties (included in Trade Receivables)Dr. Reddy’s Laboratories Ltd. 3,023 3,397OOO Dr. Reddy’s Laboratories Limited 11,750 37,024Industrias Quimicas Falcon de Mexico, S.A. 2 -Dr. Reddy’s Laboratories Inc. 69,763 24,255Dr. Reddy’s Laboratories LLC, Ukraine 296 558
iv. Due to related parties (included in Trade Payables)Dr. Reddy’s Laboratories Ltd. 15,305 -Industrias Quimicas Falcon de Mexico, S.A. 2,009 2,371Dr. Reddy’s Laboratories Romania SRL 250 213Dr. Reddy’s New Zealand Limited - 223Dr. Reddy’s Laboratories (EU) Limited 124 701
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Dr Reddy’s Laboratories SA 424
2.23: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.24: The Company incorporated in the Switzerland, is a 100% subsidiary of Dr. Reddy’s LaboratoriesLtd.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy De Ve RaymondPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to Financial Statements (continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
DRL Impex Limited 425
Dear Members,
Your Directors present the 26th Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights(` in Thousands)
Particulars 31 March 2013 31 March 2012
Profit / (Loss) for the period (823,661) 23,738Balance Brought forward 84,010 60,272Balance Carried forward to Balance Sheet (739,651) 84,010
Operations
The Company did not have any operation during the year.
Dividend
Your Directors do not recommend any dividend for the financial year ending 31 March 2013.
Change of Name
The name of the Company was changed from DRL Investments Limited to DRL Impex Limited witheffect from 11 December 2012.
Share capital
During the year under review, there was no change in the share capital of the Company.
Subsidiary Company
The Company has one wholly owned subsidiary, namely I-Ven Pharma Capital Limited as on 31March 2013. The documents / statement, pursuant to the provision of Section 212(1) of the CompaniesAct, 1956 are attached to the Balance Sheet of your Company.
Directors Responsibility statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the company at the end of the financial year 2012-13 and of net loss of the companyfor that period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
DIRECTORS’ REPORT
DRL Impex Limited 426
Directors
Mr. G V Prasad, retire by rotation at the ensuing Annual General Meeting scheduled on 29 July 2013and being eligible seeks re-appointment. Your Directors recommends his re-appointment for yourapproval at the ensuing AGM.
Mr. Umang Vohra resigned from the Board of Directors of the Company and ceases to a Director ofthe Company with effect from 11 February 2013. The Board accorded its deep appreciation for theservices rendered by him during his term.
The Board of Directors had appointed Mr. Saumen Chakraborty as an Additional Director on theBoard of Directors of the Company on 11 February 2013. He will hold this office till the conclusion ofthe 26 Annual General Meeting of the Company. Requisite notice under Section 257 of the CompaniesAct, 1956 has been received from a member proposing his appointment. It is proposed to appoint himas a Director of the Company liable to retire by rotation. The resolution for the same has been includedin the notice of the 26th Annual General Meeting of the Company.
Auditors
The Statutory Auditors of the Company M/s. A. Ramachandra Rao & Co., Chartered Accountants,retire at the ensuing 26 Annual General Meeting and have confirmed their eligibility and willingness toaccept office of auditors, if re-appointed. The Board of Directors recommends re-appointment ofM/s. A. Ramachandra Rao & Co., Chartered Accountants as Statutory Auditors of the Company forthe financial year 2013-14 for shareholder’s approval.
Particulars of Employees
There are no employees who are drawing salary more than the amount as specified under the provisionsof Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees)Rules, 1975 as amended from time to time. Hence the relevant provisions are not applicable to theCompany.
Conservation of energy research and developments, technology absorption, foreign exchangeearning and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgements
Your Directors place on record their sincere appreciation for support and co-operation extended by allthe concerned to the Company during the year.
for and on behalf of the Board of Directors
Place : Hyderabad Satish Reddy Saumen ChakrabortyDate : 10 May 2013 Director Director
DRL Impex Limited 427
AUDITORS’ REPORT
ToThe Members ofM/s DRL Impex Limited.Hyderabad.
We have audited the accompanying financial statements of DRL Impex Ltd (formerly DRL InvestmentsLtd) which comprise the Balance Sheet as at 31 March 2013, and the Statement of Profit and Lossand Cash Flow Statement for the year then ended, and a summary of significant accounting policiesand other explanatory information.
Management is responsible for the preparation of these financial statements that give a true and fairview of the financial position, financial performance and cash flows of the Company in accordancewith the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act,1956. This responsibility includes the design, implementation and maintenance of internal controlrelevant to the preparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with the Standards on Auditing issued by the Institute of CharteredAccountants of India. Those Standards require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether the financial statements are freefrom material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made by management,as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion.
01. In our opinion and to the best of our information and according to the explanations given to us,the financial statements give the information required by the Act in the manner so required andgive a true and fair view in conformity with the accounting principles generally accepted inIndia:
a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March2013;
b) in the case of the Profit and Loss Account, of the loss for the year ended on that date;and
c) in the case of the Cash Flow Statement, of the cash flows for the year ended on thatdate.
02. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Governmentof India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure astatement on the matters specified in paragraphs 4 and 5 of the Order.
DRL Impex Limited 428
03. As required by section 227(3) of the Act, we report that:
a) we have obtained all the information and explanations which to the best of our knowledgeand belief were necessary for the purpose of our audit;
b) in our opinion proper books of account as required by law have been kept by the Companyso far as appears from our examination of those books.
c) the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt withby this Report are in agreement with the books of account.
d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statementcomply with the Accounting Standards referred to in subsection (3C) of section 211 ofthe Companies Act, 1956;
e) on the basis of written representations received from the directors as on 31 March 2013,and taken on record by the Board of Directors, none of the directors is disqualified as on31 March 2013, from being appointed as a director in terms of clause (g) of sub-section(1) of section 274 of the Companies Act, 1956.
f) Since the Central Government has not issued any notification as to the rate at which thecess is to be paid under section 441A of the Companies Act, 1956 nor has it issued anyRules under the said section, prescribing the manner in which such cess is to be paid, nocess is due and payable by the Company.
For A. Ramachandra Rao & Co.,Chartered Accountants
ICAI FRN NO : 002857S
Place : Hyderabad A. Ramachandra RaoDate : 10 May 2013 Partner
Membership No. 9750
DRL Impex Limited 429
ANNEXURE TO THE AUDITORS’ REPORT(Of even date referred to in Para (2) of our Report)
We report as required under paragraph 4 that:
i. a) The Company is maintaining proper records to show full particulars, including quantitativedetails and situation of fixed assets.
b) The company has regular program of physical verification of its fixed assets which, in ouropinion, is reasonable having regard to the size of the Company and nature of its assets.
c) During the year under report, the company has not disposed off any major part of thePlant and machinery and hence clause 4(i) (c) is not applicable.
ii The Company does not have any inventories and as such verification of stocks does not arise.In view of this the clauses 4(ii)(b) and 4(ii)(c) are not applicable to the company
iii. a) The company has not granted any loans, secured or unsecured, to companies, firms orother parties covered in the register maintained u/s 301 of the Act during the year.
b) The company has taken unsecured loans from companies covered in the registermaintained u/s.301 of the act. The number of parties is one and the amount involved is` 2,592,869 thousands (previous year ` 2,548,753).
c) In our opinion the rate of interest and other terms and conditions of loans taken are notprima facie prejudicial to the interest of the company
d) In our opinion the payment of principal and interest are regular.
iv. In our opinion and according to the information and explanations given to us, there is an adequateinternal control procedures commensurate with the size of the Company and the nature of itsbusiness for the purchase of inventory and fixed assets. The Company does not have anypurchase of inventory and also for the sale of goods . During the course of our audit, we havenot observed any continuing failure to correct major weaknesses in internal control system.
v. In our opinion, and according to the information and explanations given to us, there are notransactions that need to be entered in the register maintained under section 301 of theCompanies act 1956 and hence para 4(v)(a) and 4(v)(b) are not applicable.
vi. Based on the information provided to us, in our opinion, the Company has not accepted anyDeposits from the public during the year and hence, in our opinion, the Clause 4(vi) is notapplicable to the company for the year;
vii. In our opinion, the company has an internal audit system to commensurate with its size andnature of its business.
viii. We are of the opinion, based on the information provided to us, the maintenance of cost recordshas not been prescribed by the Central Government under section 209(1) (d) of the Companiesact, 1956 to the company.
ix. a) According to the records of the company, the company is regular in depositing theundisputed statutory dues including Sales tax, Income-tax, Customs duty, Excise dutyand Employees State Insurance and Provident Fund and cess, investor education fundwith the appropriate authorities. We have been informed that the provision of providentfund, Investor Education protection fund, Employees State insurance, sales tax, customduty and Excise duty are not applicable to the company.
DRL Impex Limited 430
b) According to the information and explanations given to us, there are no dues of salestax/income tax/ customs duty/Wealth tax /excise duty/cess to be deposited on accountof any dispute;
c) Further, since the Central government has till date not prescribed the amount of cesspayable under section 441A of the Companies act 1956,we are not in a position tocomment upon the regularity or otherwise of the company in depositing the same.
x. In our opinion the accumulated losses of the company are not less than fifty percent of its networth. Further the Company has incurred cash losses during the financial year covered by ouraudit.
xi. Based on the information provided and explanation given to us, the company has not taken anyloans from banks and hence the Sub Clause (xi) is not applicable to the company for the year;
xii. In our opinion and according to the information and explanation given to us, no loans andadvances have been granted by the company on the basis of security by way of pledge ofshares, debentures and other securities.
xiii. In our opinion, the Company is not a Chit fund or Nidhi / Mutual Benefit Fund / Society andhence clause 4(xiii) of the Companies (Auditor’s Report) Order 2003 is not applicable to theCompany.
xiv. Based on the information given to us, the Company has not dealt or traded in shares, securities,debentures or other investments during the year.
xv. Based on the information provided to us, the Company has not given guarantees for loanstaken by others from Banks or Financial Institutions.
xvi. According to the information and explanations given to us, the company has not obtained anyterm loans during the year and hence clause 4(xvi) of the order is not applicable to the company.
xvii. According to the information and explanations given to us, and on an overall examination of theBalance Sheet of the Company, we are of the opinion that the funds raised on short term basishave not been used for long term investment;
xviii. Based on the information provided and explanations offered, during the year, the Companyhas not made any preferential allotment of shares to parties and companies covered in theregister maintained u/s 301 of the Companies Act 1956 and hence sub clause (xvii) of the orderis not applicable to the company for the year.
xix. The Company has not issued any debentures and not created any securities or charges inrespect of any debentures.
xx. The Company has not raised any money by way of Public Issue during the year.
xxi. In our opinion and according to the information provided and explanations offered to us, nofraud on or by the Company has been noticed or reported during the year.
For A. Ramachandra Rao & Co.,Chartered Accountants
ICAI FRN NO : 002857S
Place : Hyderabad A. Ramachandra RaoDate : 10 May 2013 Partner
Membership No. 9750
DRL Impex Limited 431
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 500 500Reserves and surplus 2.2 (739,651) 84,010
(739,151) 84,510
Non current liabilitiesLong term borrowings 2.3 2,592,869 2,548,753
2,592,869 2,548,753Current liablitiesOther current liabilities 2.4 1,215 1,373Short Term Provisions 2.5 3,733 -
4,948 1,373
TOTAL 1,858,666 2,634,636ASSETSNon current assetsFixed assets Tangible Assets 2.6 6,111 6,111Non-current investments 2.7 1,837,789 2,612,381
1,843,900 2,618,492Current assetsCash and bank balances 2.8 14,767 12,938Short-term loans and advances 2.9 - 3,206
14,767 16,144
TOTAL 1,858,666 2,634,636
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy Saumen ChakrabortyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
DRL Impex Limited 432
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeOther Income 2.10 - 106,192
Total Revenue - 106,192
ExpensesFinance costs 2.11 49,019 51,920Other expenses 2.12 50 3,199Provison for decline invalue of long - term investments 774,592 -
Total expenses 823,661 55,119
Profit /(Loss) before exceptional andextraordinary items and tax (823,661) 51,073Exceptional items -
Profit /(Loss) before extraordinary items and tax (823,661) 51,073Extraordinary Items -
Profit /(Loss) before tax (823,661) 51,073Tax expense Current tax 2.13 - 27,335 Deferred tax - -
Profit /(Loss) for the year (823,661) 23,738
Earnings per shareBasic - Par value ` 10/- per share 2.14 (16,473.22) 474.76Diluted - Par value ` 10/- per share (16,473.22) 474.76
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy Saumen ChakrabortyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
DRL Impex Limited 433
Cash Flow Statement
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars year ended year ended
31 March 2013 31 March 2012
Cash flow from operating activitiesProfit /(Loss) before tax (823,661) 51,073
Adjustments for:Add: Finance cost 49,019 51,920Add: Provison for decline in value of long - term investments 774,592 -Less: Interest Income - (106,192)
Operating profit /(Loss) before working capital changes (50) (3,199)
Decrease /(Increase) in Short Term Loans and advances 3,207 (10,619)Increase in Short Term Provisons 3,733 27,335Decrease in Other Current Liabilities (158) (178,624)
Cash generated from Operations 6,731 (165,107)Less: Income tax paid - (19,000)
Net cash provided by operating activities 6,731 (184,107)
Cash flows From/(Used In) investing activitiesRedemption of debentures - 67,619Interest on debentures received - 193,949
Cash flows From/(Used In) investing activities - 261,568
Cash flows From/(Used In) financing activitesInterest paid (4,903) (63,733)Long term borrowings - (151,100)
Cash flows From/(Used In) financing activites (4,903) (214,833)
Net increase/(decrease) in cash & bank balances 1,829 (137,372)Cash & bank balances at the beginning of the year 12,938 150,310
Cash & bank balances at the end of the year 14,767 12,938
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy Saumen ChakrabortyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
DRL Impex Limited 434
Note 1: Significant Accounting Policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation
The financial statements have been prepared and presented in accordance with Indian GenerallyAccepted Accounting Principles (GAAP)n under the historical cost convention on the accrualbasis. GAAP comprises accounting standards notified by the Central Government of Indiaunder section 211(3C) of Companies Act 1956, other pronouncements of Institute of CharteredAccountants of India, provisions of Companies Act 1956. The financial statements are roundedoff to the nearest thousands.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian RupeesThousands, for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Actual results could differ from these estimates.Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision toaccounting estimates is recognised prospectively in the current and future periods.
c) Fixed assets, depreciation and amortisation
Fixed assets are carried at the cost of acquisition or construction less accumulated depreciation.The cost of fixed assets includes non-refundable taxes, duties, freight and other incidentalexpenses related to the acquisition and installation of the respective assets. Borrowing costsdirectly attributable to acquisition or construction of those fixed assets which necessarily take asubstantial period of time to get ready for their intended use are capitalised.
Land is not depreciated. Depreciation on other fixed assets is provided using the straight-linemethod at the rates specified in Schedule XIV to the companies Act, 1956 or based on theuseful life of the assets as estimated by Management whichever is higher. Depreciation iscalculated on a pro-rata basis from the date of installation till the date the assets are sold ordisposed off. Individual assets costing less than ` 5,000 are depreciated in full in the year ofacquisition.
d) Income-tax expense
Income tax expense comprises current tax and deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and thecorresponding deferred tax liabilities or assets are recognised using the tax rates that havebeen enacted or substantially enacted by the balance sheet date. Deferred tax assets arerecognised only to the extent there is reasonable certainty that the assets can be realised in
Notes to Financial Statements
DRL Impex Limited 435
future; however, where there is unabsorbed depreciation or carry forward of losses, deferredtax assets are recognised only if there is a virtual certainty of realisation of such assets.
Deferred tax assets are reviewed at each balance sheet date and are written-down or written-up to reflect the amount that is reasonably/virtually certain (as the case may be) to be realised.The break-up of the major components of the deferred tax assets and liabilities as at balancesheet date has been arrived at after setting off deferred tax assets and liabilities where theCompany has a legally enforceable right to set-off assets against liabilities and where suchassets and liabilities relate to taxes on income levied by the same governing taxation laws.
e) Earnings per share
The basic earnings per share (“EPS”) is computed by dividing the net profit after tax for the yearby the weighted average number of equity shares outstanding during the year. For the purposeof calculating diluted earnings per share, net profit after tax for the year and the weightedaverage number of shares outstanding during the year are adjusted for the effects of all dilutivepotential equity shares. The dilutive potential equity shares are deemed converted as of thebeginning of the period, unless they have been issued at a later date. The diluted potentialequity shares have been adjusted for the proceeds receivable had the shares been actuallyissued at fair value (i.e. the average market value of the outstanding shares.
f) Provisions and contingent liabilities
The Company creates a provision when there is a present obligation as a result of a past eventthat probably requires an outflow of resources and a reliable estimate can be made of theamount of the obligation. A disclosure for a contingent liability is made when there is a possibleobligation or a present obligation that may, but probably will not, require an outflow of resources.Where there is possible obligation or a present obligation in respect of which the likelihood ofoutflow of resources is remote, no provision or disclosure is made.
g) Investments
Non-current investments are carried at cost less any other-than-temporary diminution in value,determined separately for each individual investment. The reduction in the carrying amount isreversed when there is a rise in the value of the investment or if the reasons for the reductionno longer exist.
Current investments are carried at the lower of cost and fair value. The comparison of cost andfair value is done separately in respect of each category of investment.
h) Revenue recognition
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
Service income is recognised as per the terms of contracts with customers when the relatedservices are performed, or the agreed milestones are achieved.
Notes to Financial Statements
Note 1: Significant Accounting Policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
DRL Impex Limited 436
Notes to Financial Statements
Note 2: Notes to financial statements
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised50,000 (previous year 50,000) Equity shares of ` 10/- each 500 500
500 500Issued, Subscribed and Paid up50,000 (previous year 50,000) Equity Shares of ` 10/- each 500 500
500 500
(a) Reconciliation of the shares outstanding at the beginning and at the end of reportingperiod
As at 31 March 2013 As at 31 March 2012
Particulars No. of Amount No. of Amountequity shares equity shares
Number of shares at thebeginning of the period 50,000 500 50,000 500Issued during the period - - - -
Outstanding at the end of the period 50,000 500 50,000 500
(b) Terms/rights attached to shares
The company has only one class of equity share having a par value of ` 10/- per share . Eachholder of equity share is entitled to one vote per share.
Details of shareholders holding more than 5% shares in the company
ParticularsAs at 31 March 2013 As at 31 March 2012
No. of % holding No. of % holdingequity shares in the class equity shares in the class
Dr Reddy’s Laboratories Ltd 49,994 99.99 49,994 99.99
DRL Impex Limited 437
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars As at As at31 March 2013 31 March 2012
2.2 : Reserves and surplusSurplus / (Deficit)Balance in profit and loss account brought forward 84,010 60,272Add: Transfer from General Reserve - -
84,010 60,272Add: Current Year Profit /(Loss) (823,661) 23,738
Balance Carried Forward (739,651) 84,010
2.3 : Long term borrowingsUnsecured Loan - From Dr Reddy’s Laboratories Ltd 2,592,869 2,548,753
2,592,869 2,548,753With effect from 1st January, 2013 ,interest rate reduced to 1.75% from 2%
2.4 : Other Current liabilitiesOutstanding Liabilities 124 115Due to statutory authorities- TDS Payable 1,091 1,258
1,215 1,373
2.5 : Short Term ProvisionsProvision for Tax 3,733 -
3,733 -
Notes to Financial Statements
Note 2: Notes to financial statements (Continued)
DR
L Impex Lim
ited438
2.6 : Fixed assets (All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Gross Block Depreciation / Amortization Net Block
Description As at Additions Deletions As at As at For the Deletions As at As at As at01.04.2012 31.03.2013 01.04.12 year 31.03.2013 31.03.2013 31.03.2012
Tangible AssetsLand 6,111 - - 6,111 - - - - 6,111 6,111
Total TangibleAssets 6,111 - - 6,111 - - - - 6,111 6,111
Previous year 6,111 - - 6,111 - - - - 6,111
Notes to F
inancial Statem
ents
Note 2: Notes to financial statements (Continued)
DRL Impex Limited 439
Notes to Financial Statements
Note 2: Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars As at As at31 March 2013 31 March 2012
2.7 : Non-current investmentsUnquoted investment in SubsidiaryEquity shares (fully paid up) 2,612,381 2,612,381Less: Provision for decline in the value of investment (774,592) -
1,837,789 2,612,381
2.8: Cash and bank balancesCash on hand - -Bank balances In current accounts 14,767 12,938
14,767 12,938
2.9: Short-term loans and advancesAdvance tax - 3,206
- 3,206
DRL Impex Limited 440
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.10: Other IncomeInterest income on debentures from subsidiaries - 106,192
- 106,192
2.11: Finance costsInterest on loan payable to holding company 49,019 51,920
49,019 51,920
2.12 : Other expensesInterest Others 19 3,174Auditors’ remuneration 11 11Tax Audit Fees - 11Legal & Professional 5 -Rates & Taxes 15 3
50 3,199
2.13: Income taxesCurrent taxesDomestic taxes - 27,335
Total current taxes - 27,335
2.14 : Earnings per shareNet profit /(Loss) for the year (823,661) 23,738
Shares:Weighted avg number of equity sharesoutstanding during the year - Basic 50,000 50,000Weighted avg number of equity sharesoutstanding during the year - Diluted 50,000 50,000
Basic Earnings / (Loss) in ` per share (16,473.22) 474.76Diluted Earnings / (Loss) in ` per share (16,473.22) 474.76
2.15: Related Party DisclosureThe company has the following amountdue to related parties :Due to related parties(included in unsecured loans):- 2,592,869 2,548,753Dr. Reddy’s Laboratories Limited
2,592,869 2,548,753
Notes to Financial Statements
Note 2: Notes to financial statements (Continued)
DRL Impex Limited 441
2.16: Company Name Change
With effect from 11 December 2012 the name of the company was changed from DRLInvestments Limited to DRL Impex Limited
2.17: Provision for decline in investments
Consequent to the decline in expected cash flows of some of the products forming part ofproduct related intangibles pertaining to I-ven Pharma Capital Limited (subsidiary), the Companyassessed the recoverability of money invested in its subsidiary. Accordingly, the Company hascreated a provision of ̀ 774,592 thousands for diminution in the value of long term investmentsduring the year.
2.18 : Comparitive Figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year presentation
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy Saumen ChakrabortyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2: Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
DR
L Impex Lim
ited442
Statement pursuant to Section 212 of the Companies Act, 1956
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Changesin the interest
of DRLImpex
Limitedbetween
the end of thelast financialyear and 31March 2012
Nil
Materialchanges
between theend of the
last financialyear and31 March
2012
Undervoluntaryliquidation
Name of the Subsidiary
I-VEN Pharma CapitalLimited
The FinancialYear of thesubsidiarycompanyended on
31.03.2013
Equity Shares
88,514
PreferenceShares
-
EquityHolding %
100
a) Dealt within the
account ofDRL ImpexLimited for
the yearended
31.03.2013
Nil
b) Not dealtwith in theaccount of
DRL ImpexLimited for
the yearended
31.03.2013
253,409
a) Dealt within the
account ofDRL ImpexLimited for
the yearended
31.03.2012
Nil
b) Not dealtwith in theaccount of
DRL ImpexLimited for
the yearended
31.03.2012
95,254
The net Aggregate of profits(losses) of the subsidiarycompany for it’s previousfinancial years so far as theyconcern the members ofDRL Impex Limited
The net Aggregate of profits(losses) of the subsidiarycompany for it’s financialyear so far as they concern
the members of DRLImpex Limited
Number of shares in the subsidiary company held byDRL Impex Limited at the above date
PreferenceHolding %
-
Euro Bridge Consulting B.V. 443
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012
Loss for the period after taxation (4,266) (1,770)Balance brought forward (4,596) (2,826)Balance carried forward to Balance Sheet (8,862) (4,596)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place : Hyderabad M V RamanaDate : 10 May 2013 Director
DIRECTORS’ REPORT
Euro Bridge Consulting B.V. 444
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Euro Bridge Consulting B.V., a companyincorporated and administered outside India, which comprise the Balance Sheet as at 31 March2013, and the Statement of Profit and Loss for the year ended, and a summary of significant accountingpolicies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Euro Bridge Consulting B.V. 445
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Euro Bridge Consulting B.V. 446
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 36,985 36,985Reserves and surplus 2.2 113,657 117,923
150,642 154,908
Current liabilitiesOther current liabilities 2.3 2,897 1,240
2,897 1,240
TOTAL 153,539 156,148ASSETSNon current assetsNon current investments 2.4 152,052 152,052
152,052 152,052Current assetsCash and bank balances 2.5 1,487 727Short term loans and advances 2.6 - 3,369
1,487 4,096
TOTAL 153,539 156,148
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao M V RamanaPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Euro Bridge Consulting B.V. 447
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeOther income 2.7 175 -
Total revenue 175 -
ExpensesFinance costs 2.8 - 75Other expenses 2.9 4,441 1,695
Total expenses 4,441 1,770
Profit / (Loss) before tax (4,266) (1,770)Tax expense Current tax - - Deferred tax - -
Profit / (Loss) for the year (4,266) (1,770)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao M V RamanaPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Euro Bridge Consulting B.V. 448
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under Section 211(3C) of theCompanies Act,1956, other pronouncements of Institute of Chartered Accountants of India andprovisions of the Companies Act, 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.Assets:An asset is classified as current when it satisfies any of the following criteria:a) it is expected to be realised in, or is intended for sale or consumption in, the Company’s
normal operating cycle;b) it is held primarily for the purpose of being traded;c) it is expected to be realised within 12 months after the reporting date; ord) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle
a liability for at least 12 months after the reporting date.Liabilities:A liability is classified as current when it satisfies any of the following criteria:a) it is expected to be settled in the Company’s normal operating cycle;b) it is held primarily for the purpose of being traded;c) it is due to be settled within 12 months after the reporting date; ord) the Company does not have an unconditional right to defer settlement of the liability for
at least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
Euro Bridge Consulting B.V. 449
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Investments
Investments that are readily realisable and intended to be held for not more than one year fromthe date of acquisition are classified as current investments. All other investments are classifiedas non current investments.
Non current investments are carried at cost less any other-than-temporary diminution in value,determined separately for each individual investment. The reduction in the carrying amount isreversed when there is a rise in the value of the investment or if the reasons for the reductionno longer exist. Any reduction in the carrying amount and any reversal in such reductions arecharged or credited to the statement of profit and loss.
Current investments are carried at the lower of cost and fair value. The comparison of cost andfair value is done separately in respect of each category of investment.
e) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
f) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Euro Bridge Consulting B.V. 450
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised100,000 (previous year 100,000) Equity shares of Euro 10 each 55,863 55,863
Issued56,200 (previous year 56,200) Equity shares of Euro 10 each 36,985 36,985
Subscribed and paid-up56,200 (previous year 56,200) Equity shares of Euro 10 each 36,985 36,985
36,985 36,985
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 56,200 36,985 54,200 31,094Add: Share issued during the year - - 2,000 5,891
Number of shares outstandingat the end of the year 56,200 36,985 56,200 36,985
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of Euro 10 per share.Each holder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars
No. of Equity % equity No. of Equity % equityshares held shares held shares held shares held
Reddy Antilles N.V. 56,200 100 56,200 100
Notes to Financial Statements
Note 2 : Notes to financial statements
Euro Bridge Consulting B.V. 451
Notes to Financial Statements
Note 2: Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplusSecurities premium reserveBalance at the beginning of the year 122,519 121,773Additions / (deductions) during the year - 746
122,519 122,519DeficitBalance at the beginning of the year (4,596) (2,826)Add: Current year loss (4,266) (1,770)Balance carried forward (8,862) (4,596)
113,657 117,923
2.3 : Other current liabilitiesOther current liabilities 2,897 1,240
2,897 1,240
2.4 : Non current investmentsInvestments in Subsidiaries 152,052 152,052Less: Provision for decline, other than temporary,in the value of long term investments - -
152,052 152,052
2.5 : Cash and bank balancesCash on hand - -Bank balances In current accounts 1,487 727
1,487 727
2.6 : Short term loans and advances(Unsecured)Considered goodBalances with Statutory Agencies - 12Other Advances - 3,357
- 3,369
Euro Bridge Consulting B.V. 452
Notes to Financial Statements
Note 2: Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.7 : Other incomeForeign exchange gain, net 175 -
175 -
2.8 : Finance costsInterest Expenses - 75
- 75
2.9 : Other expenseLegal and professional 376 508Foreign exchange loss, net - 73Bank charges 19 -Miscellaneous 4,046 1,114
4,441 1,695
2.10: Commitments and contingent liabilities
There were no commitments and contingent liabilities as at 31 March 2013 (previous year: Nil).
2.11: The Company is incorporated under the laws of Netherlands and is a subsidiary of ReddyAntilles N.V.
2.12: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao M V RamanaPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Idea2 Enterprises (India) Private Limited 453
Dear Members,
Your Directors present the 13th Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights(` in Thousands)
Particulars 31 March 2013 31 March 2012
Profit / (Loss) for the period (2) (5)Balance Brought forward (14,162) (14,157)Balance Carried forward to Balance Sheet (14,164) (14,162)
Operations
The Company did not have any operation during the year.
Dividend
Your Directors do not recommend any dividend for the financial year ending 31 March 2013.
Share capital
During the year under review, there was no change in the share capital of the Company.
Directors Responsibility statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the company at the end of the financial year 2012-13 and of net loss of the companyfor that period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Directors
Mr. Satish Reddy, retires by rotation at the ensuing Annual General Meeting scheduled on 29 July2013 and being eligible seeks re-appointment. Your Directors recommends his re-appointment foryour approval at the ensuing AGM.
Dr. K Anji Reddy passed away on 15 March 2013. The Board accorded its deep appreciation for theservices rendered and the invaluable contribution made by him during his tenure.
Auditors
M/s. Satyanaryana & Co., Chartered Accountants, have expressed their inability to be re-appointedas Statutory Auditors of the Company for the FY 2013-14. Further, the Company has received consent
DIRECTORS’ REPORT
Idea2 Enterprises (India) Private Limited 454
from M/s. A. Ramachandra Rao and Co., Chartered Accountants to act as Statutory Auditors of theCompany for the FY 2013-14. The Board of Directors therefore, recommend the appointment of M/s.A. Ramachandra Rao, Chartered Accountants as Statutory Auditors of the Company for FY 2013-14for the approval of the Shareholders.
Compliance Certificate
Pursuant to the provisions of Section 383A of the Companies Act, 1956, a certificate issued by aCompany Secretary in whole time practice with regard to compliance with the provisions of theCompanies Act, 1956 is enclosed as Annexure – I.
Particulars of Employees
There are no employees who are drawing salary more than the amount as specified under the provisionsof Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees)Rules, 1975 as amended from time to time. Hence the relevant provisions are not applicable to yourCompany.
Conservation of energy, research and developments, technology absorption, foreign exchangeearnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgements
Your Directors place on record their sincere appreciation for support and co-operation extended by allthe concerned to the Company during the year.
for and on behalf of the Board of Directors
Place : Hyderabad G V Prasad Satish ReddyDate : 10 May 2013 Director Director
Idea2 Enterprises (India) Private Limited 455
AUDITORS’ REPORT
To
The Members ofIdea2 Enterprises (India) Private LimitedHyderabad.
We have audited the accompanying financial statements of Idea2 Enterprises (India) Private Limitedwhich comprise the Balance Sheet as at 31 March 2013, and the Statement of Profit and Loss andCash Flow Statement for the year then ended, and a summary of significant accounting policies andother explanatory information.
Management is responsible for the preparation of these financial statements that give a true and fairview of the financial position, financial performance and cash flows of the Company in accordancewith the Accounting Standards referred to in sub-section (3C) of section 211 of the Companies Act,1956. This responsibility includes the design, implementation and maintenance of internal controlrelevant to the preparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with the Standards on Auditing issued by the Institute of CharteredAccountants of India. Those Standards require that we comply with ethical requirements and planand perform the audit to obtain reasonable assurance about whether the financial statements are freefrom material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances. An audit also includes evaluating the appropriateness ofaccounting policies used and the reasonableness of the accounting estimates made by management,as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion.
01. In our opinion and to the best of our information and according to the explanations given to us,the financial statements give the information required by the Act in the manner so required andgive a true and fair view in conformity with the accounting principles generally accepted inIndia:
a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March2013;
b) in the case of the Profit and Loss Account, of the loss for the year ended on that date;and
02. As required by the Companies (Auditor’s Report) Order, 2003 issued by the Central Governmentof India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure astatement on the matters specified in paragraphs 4 and 5 of the Order.
Idea2 Enterprises (India) Private Limited 456
03. As required by section 227(3) of the Act, we report that:
a) we have obtained all the information and explanations which to the best of our knowledgeand belief were necessary for the purpose of our audit;
b) in our opinion proper books of account as required by law have been kept by the Companyso far as appears from our examination of those books
c) the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statement dealt withby this Report are in agreement with the books of account.
d) in our opinion, the Balance Sheet, Statement of Profit and Loss, and Cash Flow Statementcomply with the Accounting Standards referred to in subsection (3C) of section 211 ofthe Companies Act, 1956;
e) on the basis of written representations received from the directors as on 31 March 2013,and taken on record by the Board of Directors, none of the directors is disqualified as on31 March 2013, from being appointed as a director in terms of clause (g) of sub-section(1) of section 274 of the Companies Act, 1956.
f) Since the Central Government has not issued any notification as to the rate at which thecess is to be paid under section 441A of the Companies Act, 1956 nor has it issued anyRules under the said section, prescribing the manner in which such cess is to be paid, nocess is due and payable by the Company.
For SATYANARAYANA & COChartered AccountantsICAI FRN No. 003680S
Place : Hyderabad (G. VENKATARATNAM)Date : 10 May 2013 Partner
Membership No. 19455
Idea2 Enterprises (India) Private Limited 457
I. a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
b) All the Fixed Assets have not been physically verified by the management during theyear but there is a regular program of verification which, in our opinion, is reasonablehaving regard to the size of the Company and nature of its assets and to the best of ourknowledge no material discrepancies were noticed on such verification;.
c) In our opinion, the Company has not disposed off substantial part of fixed assets duringthe year and the going concern status of the Company is not affected.
ii. The company does not have any inventories and hence, in our opinion ,clauses 4(ii)(a) to (c)are not applicable to the company.
iii. Based on the information and explanations provided to us, the company has not granted ortaken any loans, secured or unsecured, to companies, firms or other parties covered in theregister maintained u/s 301 of the Act during the year. Accordingly the sub-clauses (b),(c),(d)of clause 4(iii) are not applicable for the year.
iv. In our opinion and according to the information and explanations given to us, there is an adequateinternal control procedures commensurate with the size of the Company and the nature of itsbusiness for the purchase of inventory and fixed assets and also for the sale of goods andservices . During the course of our audit, we have not observed any continuing failure to correctmajor weaknesses in internal control system.
v. In our opinion, and according to the information and explanations given to us, we are of theopinion that the company has not entered into any transactions that need to be entered into theregister maintained under section 301 of the companies act 1956 and hence the Sub clause (v)is not applicable to the company for the year.
vi. Based on the information provided to us, in our opinion, the Company has not accepted anyDeposits from the public during the year and hence, in our opinion, the Clause 4(vi) is notapplicable to the company for the year;
vii. In our opinion, the company has an internal audit system to commensurate with its size andnature of its business.
viii. We are of the opinion, based on the information provided to us, that the Central Governmenthas not prescribed any accounts and records, which are required to be maintained undersection 209(1)(d) of the Act .
ix. a) According to the records of the company, the company is regular in depositing theundisputed statutory dues including Sales tax, Income-tax, Customs duty, Excise dutyand Employees State Insurance and Provident Fund and cess, investor education fundwith the appropriate authorities. We have been informed that the provisions of Employeesstate Insurance, Wealth tax and excise duty are not applicable to the company.
b) According to the information and explanations given to us, there are no dues of salestax/income tax/ customs duty/Wealth tax /excise duty/cess to be deposited on accountof any dispute;
ANNEXURE TO THE AUDITORS’ REPORT(Of even date referred to in Para (2) of our Report)
Idea2 Enterprises (India) Private Limited 458
c) Further, since the Central Government has till date not prescribed the amount of cesspayable under section 441A of the companies act 1956,we are not in a position to commentupon the regulatory or otherwise of the company in depositing the same.
x. In our opinion the accumulated losses of the company are not more than fifty percent of its networth. The company has incurred cash losses during the financial year covered by our auditand immediately preceding the financial year.
xi. Based on the information provided and explanation given to us, the company has not taken anyloans from banks and hence the clause 4(xi) is not applicable to the company for the year.
xii. In our opinion and according to the information and explanation given to us, no loans andadvances have been granted by the company on the basis of security by way of pledge ofshares, debentures and other securities.
xiii. In our opinion, the Company is not a Chit fund or Nidhi / Mutual Benefit Fund / Society andhence clause 4(xiii) of the Companies (Auditor’s Report) Order 2003 is not applicable to theCompany.
xiv. Based on the information given to us, the Company has not dealt or traded in shares, securities,debentures or other investments during the year.
xv. Based on the information provided to us, the Company has not given guarantees for loanstaken by others from Banks or Financial Institutions.
xvi. According to the information and explanations given to us, the company has not obtained anyterm loans during the year and hence clause 4(xvi) of the order is not applicable to the company.
xvii. According to the information and explanations given to us, and on an overall examination of theBalance Sheet of the Company, we are of the opinion that the funds raised on short term basishave not been used for long term investment;
xviii. Based on the information provided and explanations offered, during the year, the Companyhas not made any preferential allotment of shares to parties and companies covered in theregister maintained u/s 301 of the Companies Act 1956 and hence sub clause (xvii) of the orderis not applicable to the company for the year.
xix. The Company has not issued any debentures and not created any securities or charges inrespect of any debentures.
xx. The Company has not raised any money by way of Public Issue during the year.
xxi. In our opinion and according to the information provided and explanations offered to us, nofraud on or by the Company has been noticed or reported during the year.
For SATYANARAYANA & COChartered AccountantsICAI FRN No. 003680S
Place : Hyderabad (G. VENKATARATNAM)Date : 10 May 2013 Partner
Membership No. 19455
Idea2 Enterprises (India) Private Limited 459
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 23,778 23,778Reserves and surplus 2.2 1,422,800 1,422,802
1,446,578 1,446,580
Current liablitiesOther current liabilities 2.3 3,615 3,615Short term provisions 2.4 13 13
3,628 3,628
TOTAL 1,450,206 1,450,208ASSETSNon current assetsFixed assets Tangible Assets 2.5 1,449,989 1,449,989
1,449,989 1,449,989Current assetsCash and bank balances 2.6 216 218Short term loans and advances 2.7 1 1
217 219
TOTAL 1,450,206 1,450,208
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for Satyanarayana & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 003680S
G. Venkataratnam G V Prasad Satish ReddyPartner Director DirectorMembership No. 19455
Place : HyderabadDate : 10 May 2013
Balance Sheet
Idea2 Enterprises (India) Private Limited 460
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeOther Income 2.8 9 10
Total Revenue 9 10ExpensesOther expenses 2.9 11 15
Total expenses 11 15
Loss before exceptional andextraordinary items and tax (2) (5)Exceptional items - -
Loss before extraordinary items and tax (2) (5)Extraordinary Items - -
Loss before tax (2) (5)Tax expense Current tax - - Deferred tax - -
Loss for the year (2) (5)
Earnings per share 2.10Basic - Par value ` 10 per share (0.001) (0.002)Diluted - Par value ` 10 per share (0.001) (0.002)
Significant Accounting Policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for Satyanarayana & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 003680S
G. Venkataratnam G V Prasad Satish ReddyPartner Director DirectorMembership No. 19455
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Idea2 Enterprises (India) Private Limited 461
Note 1: Significant Accounting Policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation
The financial statements have been prepared and presented in accordance with Indian GenerallyAccepted Accounting Principles (GAAP) under the historical cost convention, on the accrualbasis. GAAP comprises accounting standards notified by the Central Government of Indiaunder section 211(3C) of Companies Act 1956, other pronouncements of Institute of CharteredAccountants of India, provisions of Companies Act 1956. The financial statements are roundedoff to the nearest thousands.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian RupeesThousands, for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Actual results could differ from these estimates.Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision toaccounting estimates is recognised prospectively in the current and future periods.
c) Fixed assets, depreciation and amortisation
Fixed assets are carried at the cost of acquisition or construction less accumulated depreciation.The cost of fixed assets includes non-refundable taxes, duties, freight and other incidentalexpenses related to the acquisition and installation of the respective assets. Borrowing costsdirectly attributable to acquisition or construction of those fixed assets which necessarily take asubstantial period of time to get ready for their intended use are capitalized.
Land is not depreciated. Depreciation on other fixed assets is provided using the straight-linemethod at the rates specified in Schedule XIV to the companies Act, 1956 or based on theuseful life of the assets as estimated by Management whichever is higher. Depreciation iscalculated on a pro-rata basis from the date of installation till the date the assets are sold ordisposed off. Individual assets costing less than ` 5,000 are depreciated in full in the year ofacquisition.
d) Income-tax expense
Income tax expense comprises current tax and deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and thecorresponding deferred tax liabilities or assets are recognised using the tax rates that havebeen enacted or substantially enacted by the balance sheet date. Deferred tax assets arerecognised only to the extent there is reasonable certainty that the assets can be realised in
Notes to Financial Statements
Idea2 Enterprises (India) Private Limited 462
future; however, where there is unabsorbed depreciation or carry forward of losses, deferredtax assets are recognised only if there is a virtual certainty of realisation of such assets.
Deferred tax assets are reviewed at each balance sheet date and are written-down or written-up to reflect the amount that is reasonably/virtually certain (as the case may be) to be realised.The break-up of the major components of the deferred tax assets and liabilities as at balancesheet date has been arrived at after setting off deferred tax assets and liabilities where theCompany has a legally enforceable right to set-off assets against liabilities and where suchassets and liabilities relate to taxes on income levied by the same governing taxation laws.
e) Earnings per share
The basic earnings per share (“EPS”) is computed by dividing the net profit after tax for the yearby the weighted average number of equity shares outstanding during the year. For the purposeof calculating diluted earnings per share, net profit after tax for the year and the weightedaverage number of shares outstanding during the year are adjusted for the effects of all dilutivepotential equity shares. The dilutive potential equity shares are deemed converted as of thebeginning of the period, unless they have been issued at a later date. The diluted potentialequity shares have been adjusted for the proceeds receivable had the shares been actuallyissued at fair value (i.e. the average market value of the outstanding shares.
f) Provisions and contingent liabilities
The Company creates a provision when there is a present obligation as a result of a past eventthat probably requires an outflow of resources and a reliable estimate can be made of theamount of the obligation. A disclosure for a contingent liability is made when there is a possibleobligation or a present obligation that may, but probably will not, require an outflow of resources.Where there is possible obligation or a present obligation in respect of which the likelihood ofoutflow of resources is remote, no provision or disclosure is made.
g) Investments
Non-current investments are carried at cost less any other-than-temporary diminution in value,determined separately for each individual investment. The reduction in the carrying amount isreversed when there is a rise in the value of the investment or if the reasons for the reductionno longer exist.
Current investments are carried at the lower of cost and fair value. The comparison of cost andfair value is done separately in respect of each category of investment.
h) Revenue recognition
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
Notes to Financial Statements
Note 1: Significant Accounting Policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Idea2 Enterprises (India) Private Limited 463
Note 2: Notes to financial statements
Notes to Financial Statements
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capital
Authorised2,500,000 (previous year 2,500,000) Equity shares of ` 10/- each 25,000 25,000
25,000 25,000Issued, Subscribed and Paid up2,377,826 (previous year 2,377,826) Equity Shares of ` 10/- each 23,778 23,778
23,778 23,778
(a) Reconciliation of the shares outstanding at the beginning and at the end of reportingperiod
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
equity shares equity shares
Number of sharesat the beginning of the period 2,377,826 23,778 2,377,826 23,778Add: Share issued during the year - - - -
Number of shares outstandingat the end of the year 2,377,826 23,778 2,377,826 23,778
(b) Terms/rights attached to sharesThe company has only one class of equity share having a par value of ` 10/- per share . Eachholder of equity share is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars
No. of % holding No. of % holdingequity shares in the class equity shares in the class
Dr Reddy’s laboratories Ltd 2,377,816 99.99 2,377,816 99.99
Idea2 Enterprises (India) Private Limited 464
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars As at As at31 March 2013 31 March 2012
2.2 : Reserves and surplusRevaluation Reserve 1,436,964 1,436,964
1,436,964 1,436,964DeficitBalance in profit and loss account brought forward (14,162) (14,157)Add: Transfer from General Reserve - -
(14,162) (14,157)Add: Current Year Loss (2) (5)
Loss carried forward (14,164) (14,162)
Total Balance Carried Forward 1,422,800 1,422,802
2.3 : Other Current liabilitiesPayable to holding company -Dr. Reddy Laboratories Ltd. 3,600 3,600Outstanding Liabilities 15 15
3,615 3,615
2.4 : Short-term provisionsProvision for tax 13 13
13 13
Note 2: Notes to financial statements (Continued)
Notes to Financial Statements
Idea2 Enterprises (India) P
rivate Limited
465
2.5 : Fixed assets (All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Gross Block Depreciation / Amortization Net Block
Description As at Additions Deletions As at As at For the Deletions As at As at As at01.04.2012 31.03.2013 01.04.12 year 31.03.2013 31.03.2013 31.03.2012
Tangible Assets
Land 1,449,989 - - 1,449,989 - - - - 1,449,989 1,449,989
Total Tangible
Assets 1,449,989 - - 1,449,989 - - - - 1,449,989 1,449,989
Previous year 1,449,942 47 - 1,449,989 - - - - 1,449,989
Note 2: Notes to financial statements (Continued)
Notes to F
inancial Statem
ents
Idea2 Enterprises (India) Private Limited 466
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars As at As at31 March 2013 31 March 2012
2.6: Cash and bank balancesCash on hand - -Bank balances In current accounts 102 104 In deposit account 114 114
216 218
2.7: Short-term loans and advancesTDS Receivable 1 1
1 1
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.8 : Other incomeInterest on fixed deposits 9 10
9 10
2.9 : Other expensesTravelling and conveyance - 1Rates and taxes - 2Auditors’ remuneration 11 11Interest - Others - 1
11 15
2.10 : Earnings per shareLoss for the year (2) (5)
Shares:Weighted average number of equity sharesoutstanding during the year - Basic 2,377,826 2,377,826Weighted average number of equity sharesoutstanding during the year - Diluted 2,377,826 2,377,826
Basic Earnings / (Loss) in ` per share (0.001) (0.002)Diluted Earnings / (Loss) in ` per share (0.001) (0.002)
Note 2: Notes to financial statements (Continued)
Notes to Financial Statements
Idea2 Enterprises (India) Private Limited 467
2.11: Related PartiesThe company has the following amount due to related parties :
Particulars As at As at31 March 2013 31 March 2012
Due to (included in other current liabilities) :
Dr Reddy’s Laboratories Ltd 3,600 3,600
2.12 : Comparitive Figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year presentation
As per our report of even date attached
for Satyanarayana & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 003680S
G. Venkataratnam G V Prasad Satish ReddyPartner Director DirectorMembership No. 19455
Place : HyderabadDate : 10 May 2013
Note 2: Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Notes to Financial Statements
Industrias Quimicas Falcon de Mexico S.A. de CV 468
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Lakhs)
Particulars 31 March 2013 31 March 2012
Loss for the period after taxation (1,992) (3,731)Balance brought forward (2,366) 1,365Balance carried forward to Balance Sheet (4,358) (2,366)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place : Hyderabad R. Ananthanarayanan V. ViswanathDate : 10 May 2013 Director Director
DIRECTORS’ REPORT
Industrias Quimicas Falcon de Mexico S.A. de CV 469
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Industrias Qumicas Falcon De Mexico,S.A. de CV a company incorporated and administered outside India, which comprise the BalanceSheet as at 31 March 2013, and the Statement of Profit and Loss for the year ended, and a summaryof significant accounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Industrias Quimicas Falcon de Mexico S.A. de CV 470
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Industrias Quimicas Falcon de Mexico S.A. de CV 471
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars Note31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 5,939 5,939Reserves and surplus 2.2 (4,733) (2,848)
1,206 3,091
Non current liabilitiesLong term borrowings 2.3 - 17,316
- 17,316Current liabilitiesShort term borrowings 2.3 18,481 -Trade payables 2.4 10,977 6,941Other current liabilities 2.5 2,625 3,817Short term provisions 2.6 2,106 1,194
34,189 11,952
TOTAL 35,395 32,359ASSETSNon current assetsFixed assets Tangible assets 2.7 12,856 11,516 Capital work-in-progress 728 895Deferred tax assets, net 2.19 1,958 1,874Long term loans and advances 2.8 5 -
15,547 14,285Current assetsInventories 2.9 6,937 8,466Trade receivables 2.10 6,619 6,521Cash and bank balances 2.11 1,848 987Short term loans and advances 2.12 4,069 1,756Other current assets 2.13 375 344
19,848 18,074
TOTAL 35,395 32,359Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao R. Ananthanarayanan V. ViswanathPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Industrias Quimicas Falcon de Mexico S.A. de CV 472
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeSales, net 28,945 20,594Other operating revenues 1,021 186
Revenue from operations 29,966 20,780Other income 2.14 116 21
Total revenue 30,082 20,801
ExpensesCost of material consumed 14,096 9,998(including packing material consumed)Changes in inventories of finished goods,work-in-progress and Stock-in-trade 2.15 1,126 143Conversion charges 976 119Employee benefits expense 2.16 7,362 7,108Finance costs 2.17 1,294 1,081Depreciation and amortization expense 2.7 1,157 1,011Other expenses 2.18 6,147 6,360
Total expenses 32,159 25,821
Profit / (Loss) before tax (2,077) (5,020)Tax expense Current tax (190) (3) Deferred tax 105 (1,286)
Profit / (Loss) for the year (1,992) (3,731)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao R. Ananthanarayanan V. ViswanathPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Industrias Quimicas Falcon de Mexico S.A. de CV 473
Note 1: Significant accounting policies(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act 1956, other pronouncements of Institute of Chartered Accountants of India andprovisions of Companies Act 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
Industrias Quimicas Falcon de Mexico S.A. de CV 474
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intendeduse, as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of tangible fixed assets aregiven below:
YearsBuildings Factory and administrative buildings 20 to 50 Ancillary structures 3 to 15Plant and machinery 3 to 15Furniture, fixtures and office equipment (other than computer equipment) 3 to 5Computer equipment 3Vehicles 3 to 5
e) Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value (NRV)is the estimated selling price in the ordinary course of the business, less the estimated costs ofcompletion and the estimated costs necessary to make the sale. Cost of inventories comprisesall cost of purchase, cost of conversion and other costs incurred in bringing the inventories totheir present location and condition.
The cost of all categories of inventory is determined using weighted average cost method.
f) Retirement benefits
Defined contribution plan
The Company’s contributions to defined contribution plans are charged to profit or loss as andwhen the services are received from the employees.
Notes to Financial Statements
Note 1: Significant Accounting Policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Industrias Quimicas Falcon de Mexico S.A. de CV 475
Defined benefit plans
The liability in respect of defined benefit plans and other post-employment benefits is calculatedusing the projected unit credit method and spread over the period during which the benefit isexpected to be derived from employees’ services, consistent with the advice of qualified actuaries.The long term obligations are measured at present value of estimated future cash flowsdiscounted at rates reflecting the yields on risk free government bonds that have maturity datesapproximating the terms of the Company’s obligations. Short-term employee benefit obligationsare measured on an undiscounted basis and are expensed as the related service is provided.
All actuarial gains and losses arising during the year are recognized in the statement of profitand loss.
g) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
h) Revenue recognition
Revenue is recognized when the significant risks and rewards of ownership have been transferredto the buyer, recovery of the consideration is probable, the associated costs and possiblereturn of goods can be estimated reliably, there is no continuing management involvement withthe goods and the amount of revenue can be measured reliably. Revenue from the sale ofgoods is measured at the fair value of the consideration received or receivable, net of returns,sales tax and applicable trade discounts and allowances. Revenue includes shipping andhandling costs billed to the customer.
Service Income
Revenue from services rendered, which primarily relate to contract research, is recognized inthe statement of profit and loss as the underlying services are performed. Upfront non-refundablepayments received under these arrangements are deferred and recognised as revenue overthe expected period over which the related services are expected to be performed.
i) Income-tax expense
Income tax expense comprises current tax and deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Notes to Financial Statements
Note 1: Significant Accounting Policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Industrias Quimicas Falcon de Mexico S.A. de CV 476
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and thecorresponding deferred tax liabilities or assets are recognised using the tax rates that havebeen enacted or substantially enacted by the balance sheet date. Deferred tax assets arerecognised only to the extent there is reasonable certainty that the assets can be realised infuture; however, where there is unabsorbed depreciation or carry forward of losses, deferredtax assets are recognised only if there is a virtual certainty of realisations of such assets.Deferred tax assets are reviewed as at each balance sheet date and written-down or written-upto reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.
Deferred tax assets and liabilities are offset where the Company has a legally enforceable rightto set-off assets against liabilities representing current tax, and where such assets and liabilitiesrelate to taxes on income levied by the same governing taxation laws.
j) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Notes to Financial Statements
Note 1: Significant Accounting Policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Industrias Quimicas Falcon de Mexico S.A. de CV 477
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised140,526,270 (previous year 140,526,270) pesos* 5,939 5,939
Issued140,526,270 (previous year 140,526,270) pesos* 5,939 5,939
Subscribed and paid-up140,526,270 (previous year 140,526,270) pesos* 5,939 5,939
5,939 5,939* No concept of nature and number of shares in this company
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year (482) (608)Additions / (deductions) during the year 107 126
(375) (482)
DeficitBalance at the beginning of the year (2,366) 1,365Add: Current year loss (1,992) (3,731)Balance carried forward (4,358) (2,366)
(4,733) (2,848)2.3 : Borrowingsa) Long term borrowings
Borrowings from holding company andother group companies - 17,316
- 17,316b) Short term borrowings
Borrowings from holding company andother group companies 18,481 -
18,481 -
2.4 : Trade PayablesPayable to holding company and other group companies 9,484 6,360Payables to others 1,493 581
10,977 6,941
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Industrias Quimicas Falcon de Mexico S.A. de CV 478
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.5 : Other current liabilitiesDue to capital creditors 259 212Due to holding company and other group companies 95 105Accrued expenses 680 1,887Salary and Bonus payable 90 85Due to statutory authorities - 144Other current liabilities 1,501 1,384
2,625 3,817
2.6 : Short term provisionsProvision for employee benefits 2,106 1,194
2,106 1,194
Industrias Quim
icas Falcon de M
exico S.A
. de CV
479
2.7 : Fixed assets (All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Gross Block Depreciation Net Block
Description As at Additions Deletions Forex As at As at For the Deletions Forex As at As at As at
01.04.2012 31.03.2013 01.04.2012 year 31.03.2013 31.03.2013 31.03.2012
Land 3,285 - - 347 3,632 - - - - - 3,632 3,285
Building 1,709 47 - 173 1,929 510 89 - 55 654 1,274 1,199
Plant & Machinery 10,588 944 - 1,117 12,649 4,149 756 - 420 5,325 7,324 6,439
Furniture and Fixtures 653 61 23 67 758 294 193 2 61 546 212 359
Vehicles 247 71 66 26 278 65 44 37 8 80 198 182
Computers 229 221 - 39 489 177 75 - 21 273 216 52
TOTAL 16,711 1,344 89 1,769 19,754 5,195 1,157 39 565 6,878 12,856 11,516
Previous year 15,059 788 128 991 16,711 3,957 1,011 92 318 5,195 11,516
Notes to F
inancial Statem
entsNote 2 : Notes to financial statements (Continued)
Industrias Quimicas Falcon de Mexico S.A. de CV 480
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.8 : Long term loans and advances(Unsecured)Considered goodCapital advances for purchase of fixed assets 4 -Security Deposits 1 -
5 -
2.9 : Inventories(Valued on weighted average basis)Raw materials 4,357 4,689Work-in-progress 1,454 1,975Finished goods - 605Stores and spares 1,088 1,156Packing materials 38 42
6,937 8,466
2.10 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months - -Other debts Considered good 3,342 3,589Receivables from holding company and other group companies 3,277 2,932
6,619 6,521Less: Provision for doubtful debts - -
6,619 6,521
2.11 : Cash and bank balancesCash on hand 2 3Bank balances In current accounts 1,846 984
1,848 987
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Industrias Quimicas Falcon de Mexico S.A. de CV 481
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.12 : Short term loans and advances(Unsecured)Considered goodAdvances to material suppliers 780 33Staff loans and advances 4 3Advance tax, net of provision for income taxes 1,014 545Balances with Statutory Agencies 1,860 836Prepaid expenses 410 338Other Advances 1 1
4,069 1,756
2.13 : Other current assetsConsidered goodOther current assets 375 344
375 344
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Industrias Quimicas Falcon de Mexico S.A. de CV 482
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.14 : Other incomeInterest income 3 4Profit on sale of fixed assets, net - 8Foreign exchange gain, net 113 9
116 21
2.15 : Changes in inventories of finished goods,work in progress and stock in tradeNet (increase) / decrease in stock
OpeningWork-in-process 1,975 2,658Finished goods 605 2,580 65 2,723
ClosingWork-in-process 1,454 1,975Finished goods - 1,454 605 2,580
Net (increase) 1,126 143
2.16 : Employee benefits expenseSalaries, wages and bonus 7,083 6,605Contribution to provident and other funds 22 25Staff welfare expenses 257 478
7,362 7,108
2.17 : Finance costsInterest Expenses 1,294 1,081
1,294 1,081
Notes to Financial Statements
Note 2 : Notes to Financial Statementss (Continued)
Industrias Quimicas Falcon de Mexico S.A. de CV 483
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.18 : Other expenseConsumption of Stores and spare parts 649 1,302Legal and professional 322 286Carriage outward 114 104Rates and taxes 71 55Commision on Sales 14 -Other selling expenses 147 6Repairs and maintenance Buildings 3 - Plant and machinery 1,085 999 Others 503 510Power and fuel 2,488 2,532Travelling and conveyance 85 38Communication 100 77Rent 14 9Insurance 128 107Donations - 8Printing and stationery 19 16Bank charges 16 11Loss on sale of fixed assets, net 1 -Miscellaneous 388 300
6,147 6,360
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Industrias Quimicas Falcon de Mexico S.A. de CV 484
2.19: Deferred taxation
Deferred tax asset, net included in the balance sheet comprises the following:
Particulars As at As at31 March 2013 31 March 2012
Deferred tax assets/(liabilities)Trade receivables 151 137Other Current assets 182 143Other Current Liabilities 557 334Inventories 1,057 1,156Fixed assets (657) (697)Loss carry forward 668 801
Deferred tax asset, net 1,958 1,874
2.20: Commitments and contingent liabilities
Loss contingencies arising from claims, litigations, assessments, fines, penalties etc. are providedfor when it is probable that a liability may be incurred, and the amount can be reasonablyestimated.
Particulars As at As at31 March 2013 31 March 2012
Estimated amount of contracts remaining to beexecuted on capital account and not provided 47 47for (net of advances)
2.21: Related party disclosures
The company has the following amounts dut to / from related party transactions:
Particulars As at As at31 March 2013 31 March 2012
i. Due from related parties(included in Trade Receivables):Dr. Reddy’s Laboratories Inc. 1,268 253Dr. Reddy’s Laboratories SA 2,009 2,679
ii. Due to related parties (included in Trade Payables):Dr. Reddy’s Laboratories Limited 9,482 6,176Dr. Reddy’s Laboratories Inc. 2 184
iii. Due to related parties (included in Borrowings):Dr. Reddy’s Laboratories Limited 18,479 16,146Dr. Reddy’s Laboratories Inc. 2 1275
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Industrias Quimicas Falcon de Mexico S.A. de CV 485
2.22: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.23: The Company, incorporated in Mexico, is a 100% subsidiary of Dr. Reddy’s Laboratories Limited.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao R. Ananthanarayanan V. ViswanathPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Kunshan Rotam Reddy Pharmaceuticals Co. Ltd. 486
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Lakhs)
Particulars 31 March 2013 31 March 2012
Profit for the period after taxation 1,804 1,024Balance brought forward (3,797) (4,821)Balance carried forward to Balance Sheet (1,993) (3,797)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of profit of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Satish Reddy G V PrasadPlace : Hyderabad Director DirectorDate : 10 May 2013
DIRECTORS’ REPORT
Kunshan Rotam Reddy Pharmaceuticals Co. Ltd. 487
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Kunshan Rotam Reddy PharmaceuticalsCompany Limited, a company incorporated and administered outside India, which comprise theBalance Sheet as at 31 March 2013, and the Statement of Profit and Loss for the year ended, and asummary of significant accounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Kunshan Rotam Reddy Pharmaceuticals Co. Ltd. 488
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Kunshan Rotam Reddy Pharmaceuticals Co. Ltd. 489
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars Note31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 7,905 7,905Reserves and surplus 2.2 (724) (2,946)
7,181 4,959
Current liabilitiesShort term borrowings 2.3 - 930Trade payables 2.4 2,595 2,471Other current liabilities 2.5 2,940 1,377Short term provisions 2.6 - 90
5,535 4,868
TOTAL 12,716 9,827ASSETSNon current assetsFixed assets Tangible assets 2.7 2,541 1,883 Intangible assets 2.7 82 95 Capital work-in-progress 94 283Deferred tax assets, net 2.21 138 126Long term loans and advances 2.8 3 7
2,858 2,393Current assetsInventories 2.9 2,419 1,856Trade receivables 2.10 3,119 2,695Cash and bank balances 2.11 2,453 553Short term loans and advances 2.12 617 511Other current assets 2.13 1,250 1,818
9,858 7,433
TOTAL 12,716 9,827Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G V PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Kunshan Rotam Reddy Pharmaceuticals Co. Ltd. 490
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeSales, net 19,154 12,384Other operating revenues 97 48
Revenue from operations 19,251 12,432Other income 2.14 12 76
Total revenue 19,263 12,508
ExpensesCost of material consumed(including packing material consumed) 5,137 3,547Changes in inventories of finished goods,work-in-progress and Stock-in-trade 2.15 (197) (277)Employee benefits expense 2.16 4,412 2,987Finance costs 2.17 41 74Depreciation and amortization expense 2.7 79 60Research and development 163 140Other expenses 2.18 7,519 4,791
Total expenses 17,154 11,323
Profit before tax 2,110 1,185Tax expense Current tax 311 192 Deferred tax (4) (30)
Profit for the year 1,804 1,024
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G V PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Kunshan Rotam Reddy Pharmaceuticals Co. Ltd. 491
Note 1: Significant accounting policies
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under Section 211(3C) ofCompanies Act, 1956, other pronouncements of Institute of Chartered Accountants of Indiaand provisions of the Companies Act, 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with Section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
Kunshan Rotam Reddy Pharmaceuticals Co. Ltd. 492
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intendeduse, as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of tangible fixed assets aregiven below:
YearsBuildings Factory and administrative buildings 20 to 50 Ancillary structures 3 to 15Plant and machinery 3 to 15Laboratory equipment 4 to 10Furniture, fixtures and office equipment (other than computer equipment) 3 to 5Computer equipment 3
e) Intangible assets and amortization
Intangible assets are recorded at the consideration paid for acquisition including any importduties and other taxes (other than those subsequently recoverable by the enterprise from thetaxing authorities), and any directly attributable expenditure on making the asset ready for itsintended use.
Intangible assets are amortised on a systematic basis over the best estimate of their usefullives, commencing from the date the asset is available to the Company for its use.
The management’s estimates of the useful lives for various categories of intangible assets areas follows:
Years
Patents, trademarks, etc. (including marketing/ distribution rights) 3 to 16
Note 1: Significant accounting policies (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Kunshan Rotam Reddy Pharmaceuticals Co. Ltd. 493
f) Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value (NRV)is the estimated selling price in the ordinary course of the business, less the estimated costs ofcompletion and the estimated costs necessary to make the sale. Cost of inventories comprisesall cost of purchase, cost of conversion and other costs incurred in bringing the inventories totheir present location and condition.
The cost of all categories of inventory is determined using weighted average cost method.
g) Retirement benefits
Contributions payable to employees, pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
h) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
i) Revenue recognition
Sale of goods
Revenue is recognized when the significant risks and rewards of ownership have been transferredto the buyer, recovery of the consideration is probable, the associated costs and possiblereturn of goods can be estimated reliably, there is no continuing management involvement withthe goods and the amount of revenue can be measured reliably. Revenue from the sale ofgoods is measured at the fair value of the consideration received or receivable, net of returns,sales tax and applicable trade discounts and allowances.
j) Income-tax expense
Income tax expense comprises current tax and deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and thecorresponding deferred tax liabilities or assets are recognised using the tax rates that havebeen enacted or substantially enacted by the balance sheet date. Deferred tax assets arerecognised only to the extent there is reasonable certainty that the assets can be realised infuture; however, where there is unabsorbed depreciation or carry forward of losses, deferred
Note 1: Significant accounting policies (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Kunshan Rotam Reddy Pharmaceuticals Co. Ltd. 494
tax assets are recognised only if there is a virtual certainty of realisations of such assets.Deferred tax assets are reviewed as at each balance sheet date and written-down or written-upto reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.
Deferred tax assets and liabilities are offset where the Company has a legally enforceable rightto set-off assets against liabilities representing current tax, and where such assets and liabilitiesrelate to taxes on income levied by the same governing taxation laws.
k) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Note 1: Significant accounting policies (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Kunshan Rotam Reddy Pharmaceuticals Co. Ltd. 495
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorisedUSD 29,990,000 (previous year 29,990,000)* 12,896 12,896
IssuedUSD 18,330,110 (previous year 18,330,110)* 7,905 7,905
Subscribed and paid-upUSD 18,330,110 (previous year 18,330,110)* 7,905 7,905
7,905 7,905* No concept of nature and number of shares in this company
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year 851 175Additions / (deductions) during the year 418 676
1,269 851DeficitBalance at the beginning of the year (3,797) (4,821)Add: Current year profit 1,804 1,024
Balance carried forward (1,993) (3,797)
(724) (2,946)
2.3 : Short term borrowingsOther short term loans - 930
- 930
2.4 : Trade PayablesPayables to others 2,595 2,471
2,595 2,471
2.5 : Other current liabilitiesOther current liabilities 2,940 1,377
2,940 1,377
2.6 : Short term provisionsIncome tax payable - 90
- 90
Notes to Financial Statements
Note 2 : Notes to financial statements
Kunshan R
otam R
eddy Pharm
aceuticals Co. Ltd.
496
2.7 : Fixed assets (All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Gross Block Depreciation / Amortisation Net Block
Description As at Addition Deletions Forex As at As at For the Deletions Forex 31.03.13 As at As at
01.04.2012 31.03.13 01.04.12 Year 31.03.13 31.03.2012
Leasehold land 443 - - 41 484 136 4 - 20 160 324 308
Vehicles 92 - - 7 99 67 4 - 5 76 23 25
Buildings 2,163 498 - 231 2,892 1,097 44 - 223 1,364 1,528 1,066
Plant & Machinery 673 144 - 82 898 456 14 - 78 548 350 217
Lab Equipment 544 30 - 60 634 320 10 - 57 387 247 224
Office Equipment 226 28 8 28 274 182 3 6 26 205 69 44
Total Tangible 4,141 700 8 449 5,282 2,258 79 6 410 2,741 2,541 1,883
Assets (A)
Trade Marks 167 - 49 14 132 72 - 28 6 50 82 95
Total Intangible 167 - 49 14 132 72 - 28 6 50 82 95
Assets (B)
TOTAL (A+B) 4,308 700 57 463 5,414 2,330 79 34 416 2,791 2,623 1,978
Previous year 3,792 260 53 309 4,308 2,130 60 - 140 2,330 1,978
Notes to F
inancial Statem
ents
Note 2 : Notes to financial statements (Continued)
Kunshan Rotam Reddy Pharmaceuticals Co. Ltd. 497
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.8 : Long term loans and advances(Unsecured)Considered goodSecurity Deposits 3 7
3 7
2.9 : Inventories(Valued on weighted average basis)Raw materials 1,260 913Work-in-progress 217 212Finished goods 885 693Stores and spares 57 38
2,419 1,856
2.10 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months Considered good - - Considered doubtful 115 179Other debts Considered good 3,119 2,695
3,234 2,874Less: Provision for doubtful debts (115) (179)
3,119 2,695
2.11 : Cash and bank balancesCash on hand - 2Bank balances In current accounts 2,453 551
2,453 553
2.12 : Short term loans and advances(Unsecured)Considered goodAdvance tax, net of provision for income taxes 220 203Prepaid expenses 29 9Other Advances 368 299
617 511
Kunshan Rotam Reddy Pharmaceuticals Co. Ltd. 498
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.13 : Other current assetsConsidered goodClaims receivable 974 1,498Other current assets 276 320
1,250 1,818
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.14 : Other incomeForeign exchange gain, net 12 76
12 76
2.15 : Changes in inventories of finished goods,work in progress and stock in tradeNet (increase) / decrease in stockOpening
Work-in-process 212 99Finished goods 693 905 530 629
ClosingWork-in-process 217 212Finished goods 885 1,102 693 905
Net (increase) (197) (277)
2.16 : Employee benefits expenseSalaries, wages and bonus 4,169 2,809Contribution to provident and other funds 116 89Staff welfare expenses 127 89
4,412 2,987
Kunshan Rotam Reddy Pharmaceuticals Co. Ltd. 499
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.17 : Finance costsInterest Expenses 41 74
41 74
2.18 : Other expenseConsumption of Stores and spare parts 24 76Legal and professional 24 2Rates and taxes 325 220Other selling expenses 2,169 1,393Travelling and conveyance 4,139 2,336Communication 33 24Insurance 7 10Printing and stationery 6 4Bank charges 10 7Advertisements 7 6Miscellaneous 775 713
7,519 4,791
Kunshan Rotam Reddy Pharmaceuticals Co. Ltd. 500
2.19 Contingencies and commitment liabilities
Particulars As at As at31 March 2013 31 March 2012
Estimated amount of contracts remaining to be executedon capital account and not provided for (net of advances) Nil 16
2.20: Deferred taxation
Deferred tax asset, net included in the balance sheet comprises the following:
Particulars As at As at31 March 2013 31 March 2012
Deferred tax assets / (liabilities)Inventories 94 119Fixed Assets 29 5Other Current assets 15 2
Deferred Tax Asset, Net 138 126
2.21: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.22: The Company is incorporated in the People’s Republic of China. Dr. Reddy’s LaboratoriesLimited holds 51.33% of the share capital of the Company.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G V PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Lacock Holdings Limited 501
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012
Profit/ (Loss) for the period after taxation (940,739) 353,064Balance brought forward 1,981,224 1,628,160Balance carried forward to Balance Sheet 1,040,485 1,981,224
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Milorad Vujnovic Satish ReddyPlace : Hyderabad Director DirectorDate : 10 May 2013
DIRECTORS’ REPORT
Lacock Holdings Limited 502
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Lacock Holdings Limited, a companyincorporated and administered outside India, which comprise the Balance Sheet as at 31 March2013, and the Statement of Profit and Loss for the year ended, and a summary of significant accountingpolicies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act,1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the Loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Lacock Holdings Limited 503
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Lacock Holdings Limited 504
(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 1,325 1,325Reserves and surplus 2.2 19,012,029 19,591,135
19,013,354 19,592,460
Non current liabilitiesLong term borrowings 2.3 10,338,855 9,123,092
10,338,855 9,123,092Current liablitiesOther current liabilities 2.4 3,089 696,036Short term provisions 2.5 19,362 22,160
22,451 718,196
TOTAL 29,374,660 29,433,748
ASSETSNon current assetsNon current investments 2.6 5,806,125 5,868,919Long term loans and advances 2.7 23,557,810 23,506,836
29,363,935 29,375,755Current assetsCash and bank balances 2.8 10,485 57,759Other current assets 2.9 240 234
10,725 57,993
TOTAL 29,374,660 29,433,748Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy Milorad VujnovicPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Lacock Holdings Limited 505
(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeOther income 2.10 616,450 833,219
Total revenue 616,450 833,219
ExpensesFinance costs 2.11 306,702 410,696Other expenses 2.12 1,132,123 5,028Permanent reduction in carrying amount oflong term investments 62,794 -
Total expenses 1,501,619 415,724
Profit / (loss) before tax (885,169) 417,495Tax expense Current tax 55,570 64,431 Deferred tax - -
Profit / (loss) for the year (940,739) 353,064
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy Milorad VujnovicPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Lacock Holdings Limited 506
Note 1: Significant accounting policies(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under Section 211(3C) of theCompanies Act, 1956, other pronouncements of Institute of Chartered Accountants of Indiaand provisions of the Companies Act, 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with Section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
Notes to Financial Statements
Lacock Holdings Limited 507
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
d) Investments
Investments that are readily realisable and intended to be held for not more than one year fromthe date of acquisition are classified as current investments. All other investments are classifiedas non current investments.
Non current investments are carried at cost less any other-than-temporary diminution in value,determined separately for each individual investment. The reduction in the carrying amount isreversed when there is a rise in the value of the investment or if the reasons for the reductionno longer exist. Any reduction in the carrying amount and any reversal in such reductions arecharged or credited to the statement of profit and loss.
Current investments are carried at the lower of cost and fair value. The comparison of cost andfair value is done separately in respect of each category of investment.
e) Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
f) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the datesof the respective transactions. Exchange differences arising on foreign currency transactionssettled during the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
g) Income-tax expense
Income tax expense comprises current tax or deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and thecorresponding deferred tax liabilities or assets are recognised using the tax rates that havebeen enacted or substantially enacted by the balance sheet date. Deferred tax assets arerecognised only to the extent there is reasonable certainty that the assets can be realised infuture; however, where there is unabsorbed depreciation or carry forward of losses, deferredtax assets are recognised only if there is a virtual certainty of realisations of such assets.Deferred tax assets are reviewed as at each balance sheet date and written-down or written-upto reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.
Deferred tax assets and liabilities are offset where the Company has a legally enforceable rightto set-off assets against liabilities representing current tax, and where such assets and liabilitiesrelate to taxes on income levied by the same governing taxation laws.
Lacock Holdings Limited 508
h) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
Lacock Holdings Limited 509
(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capital
Authorised50,000 (previous year 50,000) Equity shares of Euro 1.71 each 4,133 4,133
Issued16,033 (previous year 16,033) Equity shares of Euro 1.71 each 1,325 1,325
Subscribed and paid-up16,033 (previous year 16,033) Equity shares of Euro 1.71 each 1,325 1,325
1,325 1,325
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 16,033 1,325 16,033 1,325Add: Share issued during the year - - - -
Number of shares outstandingat the end of the year 16,033 1,325 16,033 1,325
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of Euro 1.71 per share.Each holder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars No. of Equity % equity No. of Equity % equity
shares held shares held shares held shares held
Dr. Reddy's Laboratories Limited 16,033 100 16,033 100
Notes to Financial Statements
Note 2 : Notes to financial statements
Lacock Holdings Limited 510
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year 1,511,272 617,602Additions / (deductions) during the year 361,633 893,670
1,872,905 1,511,272
Securities premium reserveBalance at the beginning of the year 16,098,639 16,098,639Additions / (deductions) during the year - -
16,098,639 16,098,639
SurplusBalance at the beginning of the year 1,981,224 1,628,160Add: Current year profit / (loss) (940,739) 353,064Balance carried forward 1,040,485 1,981,224
19,012,029 19,591,135
2.3 : Long term borrowingsBorrowings from holding company and other group companies 10,338,855 9,123,092
10,338,855 9,123,092
2.4 : Other current liabilitiesDue to holding company and other group companies - 694,838Other current liabilities 3,089 1,198
3,089 696,036
2.5 : Short term provisionsIncome tax payable 19,362 22,160
19,362 22,160
2.6 : Non current investmentInvestments in Subsidiaries 5,868,919 5,868,919Less: Provision for decline, other than temporary,in the value of long term investments (62,794) -
5,806,125 5,868,919
Lacock Holdings Limited 511
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.7 : Long term loans and advancesUnsecuredConsidered goodLoan to holding company and other group companies 24,648,534 23,506,836
24,648,534 23,506,836Less: Provision for loan to holding companyand other group companies (1,090,724) -
23,557,810 23,506,836
2.8 : Cash and bank balancesCash on hand - -Bank balances In current accounts 10,485 57,759
10,485 57,759
2.9 : Other current assetsConsidered goodOther current assets 240 234
240 234
Lacock Holdings Limited 512
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.10 : Other incomeInterest income 616,450 833,219
616,450 833,219
2.11 : Finance costsInterest expense 306,702 410,696
306,702 410,696
2.12 : Other expenseLegal and professional 4,933 4,564Rates and taxes 2,870 -Forex - 306Provision - Advances & Debtors 1,124,097 -Bank charges 223 158
1,132,123 5,028
Lacock Holdings Limited 513
2.13: Contingencies and Commitments
There were no commitments and contingent liabilities as at 31 March 2013 (previous year: Nil).
2.14: Related party disclosures
The Company has following amounts due from/ to related parties:
As at As atParticulars 31 March 2013 31 March 2012
i. Due to related parties(included in long term borrowings andother current liabilities)Dr. Reddy’s Laboratories Limited - 694,838Dr. Reddy’s Laboratories SA 10,338,855 9,123,092
ii. Due from related parties(included in long term loans & Advances)Reddy Holding GmbH 23,557,810 22,509,523Reddy Pharma Italia 1,090,724 997,313
iii. Provisions outstanding at the end of the yearon dues from related partiesReddy Pharma Italia 1,090,724 -
2.15: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.16: The Company, incorporated in Cyprus, is a 100% subsidiary of Dr. Reddy’s Laboratories Limited.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy Milorad VujnovicPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
OctoPlus Development B. V. 514
Dear Members,
Your Directors present the Annual Report of the Company for the period 15 February 2013 to 31March 2013.
Reddy Netherlands B.V. (RNBV) acquired the controlling stake of 93.1% on 15 February 2013 in theCompany. As on 31 March 2013, RNBV has a total share holding of 98.91% in the Company.
Financial Highlights
The following table gives the financial highlights of the Company for the period 15 February 2013 to31 March 2013:
(` in Thousands)
Particulars 15 February 2013-31 March 2013
Profit for the period after taxation 68,294Balance brought forward (829,146)Balance carried forward to Balance Sheet (760,852)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the 31 March 2013 and of profit of the Company for theperiod 15 February 2013 to 31 March 2013;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared these accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the period.
for and on behalf of the Board of Directors
Place: Hyderabad OctoPlus N.V.Date: 10 May 2013 Director
DIRECTORS’ REPORT
OctoPlus Development B. V. 515
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of OctoPlus Development B.V., a companyincorporated and administered outside India, which comprise the Balance Sheet as at 31 March2013, and the Statement of Profit and Loss for the period 15 February 2013 to 31 March 2013, and asummary of significant accounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the profit for the period 15 February 2013 to31 March 2013; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
OctoPlus Development B. V. 516
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
OctoPlus Development B. V. 517
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars Note 31 March 2013
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 1,296Reserves and surplus 2.2 371,880
373,176Non current liabilitiesLong term borrowings 2.3 8,771
8,771Current liabilitiesTrade payables 2.4 34,528Other current liabilities 2.5 728,461
762,989
TOTAL 1,144,936ASSETSNon current assetsFixed assets Tangible assets 2.6 464,562 Intangible assets 2.6 3,004 Capital work-in-progress 706
468,272Current assetsInventories 2.7 40,445Trade receivables 2.8 86,767Cash and bank balances 2.9 9,992Short term loans and advances 2.10 16,515Other current assets 2.11 522,945
676,664
TOTAL 1,144,936Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao OctoPlus N.V.Partner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
OctoPlus Development B. V. 518
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the periodParticulars Note 15 February 2013 -
31 March 2013
IncomeService income 51,992Other operating revenues 53,268
Revenue from operations 105,260Other income -
Total revenue 105,260
ExpensesCost of material consumed(including packing material consumed) 1,411Employee benefits expense 2.12 18,963Finance costs 2.13 133Depreciation and amortization expense 2.6 11,520Other expenses 2.14 4,939
Total expenses 36,966
Profit before tax 68,294Tax expense 2.17 Current tax - Deferred tax -
Profit for the period 68,294
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao OctoPlus N.V.Partner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
OctoPlus Development B. V. 519
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act 1956, other pronouncements of Institute of Chartered Accountants of India andprovisions of Companies Act 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
OctoPlus Development B. V. 520
Current assets/ liabilities include the current portion of non current financial assets/liabilities respectively. All other assets/ liabilities are classified as non current.
d) Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value (NRV)is the estimated selling price in the ordinary course of the business, less the estimated costs ofcompletion and the estimated costs necessary to make the sale. Cost of inventories comprisesall cost of purchase, cost of conversion and other costs incurred in bringing the inventories totheir present location and condition.
The cost of all categories of inventory is determined using weighted average cost method.
e) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intendeduse, as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of tangible fixed assets aregiven below:
YearsPlant and machinery 3 to 15Laboratory equipment 4 to 10Furniture, fixtures and office equipment (other than computer equipment) 3 to 5Computer equipment 3
f) Intangible assets and amortization
Intangible assets are recorded at the consideration paid for acquisition including any importduties and other taxes (other than those subsequently recoverable by the enterprise from thetaxing authorities), and any directly attributable expenditure on making the asset ready for itsintended use.
Intangible assets are amortised on a systematic basis over the best estimate of their usefullives, commencing from the date the asset is available to the Company for its use.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
OctoPlus Development B. V. 521
The management’s estimates of the useful lives for various categories of intangible assets areas follows:
YearsSoftware 3
g) Retirement benefits
Contributions payable to employees, pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
h) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
i) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
j) Service income
Revenue from services rendered, which primarily relate to contract research, is recognized inthe statement of profit and loss as the underlying services are performed. Upfront non-refundablepayments received under these arrangements are deferred and recognised as revenue overthe expected period over which the related services are expected to be performed.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
OctoPlus Development B. V. 522
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars 31 March 2013
2.1 : Share capitalAuthorised100,000 shares of Euro 1 each 7,140
Issued18,151 shares of Euro 1 each 1,296
Subscribed and paid-up18,151 shares of Euro 1 each 1,296
1,296
(a) Reconciliation of the equity shares outstanding is set out below:
Particulars No of Amountequity shares
Number of shares outstanding as at 15 February 2013 18,151 1,296Add : Shares issued during the period - -Number of shares outstanding as at 31 March 2013 18,151 1,296
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of Euro 1 per share. Eachholder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013Particulars No of equity % of equity
shares held shares held
OctoPlus N.V. 18,151 100
Notes to Financial Statements
Note 2 : Notes to financial statements
OctoPlus Development B. V. 523
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars 31 March 2013
2.2 : Reserves and surplusForeign currency translation reserveBalance as at 15 February 2013 -Additions / (deductions) during the period (1,049)
(1,049)Securities premium reserveBalance as at 15 February 2013 972,930Additions / (deductions) during the period -
972,930General ReserveBalance as at 15 February 2013 160,851Additions / (deductions) during the period -
160,851Surplus / (deficit)Balance as at 15 February 2013 (829,146)Add: Current period profit 68,294
Balance carried forward (760,852)
371,880
2.3 : Long term borrowingsLong term maturities of finance lease obligations 8,771
8,771
2.4 : Trade PayablesPayable to others 34,528
34,528
2.5 : Other current liabilitiesAccrued expenses 17,658Current maturities of finance lease obligations 34,625Due to statutory authorities 1,034Due to holding company and other group companies 491,171Other current liabilities 183,973
728,461
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
OctoP
lus Developm
ent B. V
.524
Notes to F
inancial Statem
ents
2.6 : Fixed assets (All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Gross Block Depreciation / Amortisation Net Block
Description As at Acqui- Addition Deletions Forex As at As at For the Deletions Forex As at As at
01.04.2012 sition 31.03.13 01.04.12 Year 31.03.13 31.03.13
Plant & Machinery - 441,877 - - (4,174) 437,703 - 9,876 - (146) 9,730 427,973Lab Equipment - 33,822 - - (319) 33,502 - 990 - (15) 975 32,527Office equipment - 2,794 - - (31) 2,763 - 244 - (4) 240 2,523Computers - 1,697 - - (17) 1,680 - 143 - (2) 141 1,539
Total Tangible - 480,190 - - (4,541) 475,648 - 11,253 - (167) 11,086 464,562Assets (A)
Intangibles - 3,300 - - (31) 3,269 - 267 - (2) 265 3,004
Total IntangibleAssets (B) - 3,300 - - (31) 3,269 - 267 - (2) 265 3,004
TOTAL (A+B) - 483,490 - - (4,573) 478,917 - 11,520 - (169) 11,351 467,566
Note 2 : Notes to financial statements (Continued)
OctoPlus Development B. V. 525
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars 31 March 2013
2.7 : Inventories(Valued on weighted average basis)Raw materials 40,445
40,445
2.8 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months -Other debts Considered good 86,767
86,767Less: Provision for doubtful debts -
86,767
2.9 : Cash and bank balancesCash on hand -Bank balances In current accounts 9,992
9,992
2.10 : Short term loans and advances(Unsecured)Considered goodAdvances to material suppliers 7,321Prepaid expenses 9,194
16,515
2.11 : Other current assetsConsidered goodOther receivables from holding companyand other group companies 522,945
522,945
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
OctoPlus Development B. V. 526
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the periodParticulars 15 February 2013 -
31 March 2013
2.12 : Employee benefits expenseSalaries, wages and bonus 14,575Contribution to provident and other funds 2,412Staff welfare expenses 1,976
18,963
2.13 : Finance costsInterest Expenses 133
133
2.14 : Other expenseLegal and professional 344Carriage outward 464Repairs and maintenance Plant and machinery 2,463 Others 1,105Power and fuel 118Travelling and conveyance 24Communication 157Rent 57Forex 33Printing and stationery 121Bank charges 53
4,939
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
OctoPlus Development B. V. 527
2.15: Commitments and contingent liabilities
There were no commitments or contingent liabilities as at 31 March 2013.
2.16: Related Party Disclosures:
The company has the following amount due to/from related parties :
Particulars As at31 March 2013
i. Due to related parties (included in Other current liabilities)OctoShare B.V. 450,182OctoPlus Technologies B.V. 40,989
ii. Due from related parties (included in Other current assets)OctoPlus N.V. 124,792OctoPlus Sciences B.V. 53,142OctoPlus PolyActive Sciences B.V. 3Chienna B.V. 345,008
2.17: Tax expense for the company is computed and presented together with the parent company's(OctoPlus N.V.) financial as per the tax laws of Netherlands.
2.18: Comparative Figures :
The company is a 100% subsidiary of OctoPlus N.V.
Dr. Reddy's Laboratories Limited had acquired OctoPlus N.V. through its wholly owned stepdown subsidiary Reddy Netherlands B.V. on 15 February 2013, accordingly comparative figuresare not presented.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao OctoPlus N.V.Partner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
OctoPlus N. V. 528
Dear Members,
Your Directors present the Annual Report of the Company for the period 15 February 2013 to 31March 2013.
Reddy Netherlands B.V. (RNBV) acquired the controlling stake of 93.1% on 15 February 2013 in theCompany. As on 31 March 2013, RNBV has a total share holding of 98.91% in the Company.
Financial Highlights
The following table gives the financial highlights of the Company for the period 15 February 2013 to31 March 2013:
(` in Thousands)
Particulars 15 February 2013-31 March 2013
Loss for the period after taxation (75,405)Balance brought forward (2,676,253)Balance carried forward to Balance Sheet (2,751,658)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the 31 March 2013 and of loss of the Company for theperiod 15 February 2013 to 31 March 2013;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared these accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the period.
for and on behalf of the Board of Directors
Place: Hyderabad Jan H. Egberts Susan SwarteDate: 10 May, 2013 CEO CFO
DIRECTORS’ REPORT
OctoPlus N. V. 529
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of OctoPlus N.V., a company incorporatedand administered outside India, which comprise the Balance Sheet as at 31 March 2013, and theStatement of Profit and Loss for the period 15 February 2013 to 31 March 2013, and a summary ofsignificant accounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the loss for the period 15 February 2013 to 31March 2013; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge and
OctoPlus N. V. 530
belief were necessary for the purpose of our audit;
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
OctoPlus N. V. 531
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars Note 31 March 2013
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 451,292Reserves and surplus 2.2 789,713
1,241,005Non current liabilitiesLong term borrowings 2.3 776,259
776,259Current liabilitiesTrade payables 2.4 50,657Other current liabilities 2.5 344,709Short term provisions 2.6 1,979
397,345
TOTAL 2,414,609ASSETSNon current assetsFixed assets Tangible assets 2.7 412,691 Intangible assets 2.7 16,887Non current investments 2.8 -Deferred tax assets, net 2.18 951
430,529Current assetsTrade receivables 2.9 11,436Cash and bank balances 2.10 73,904Short term loans and advances 2.11 29,818Other current assets 2.12 1,868,922
1,984,080
TOTAL 2,414,609Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Jan H. Egberts Susan SwartePartner CEO CFOMembership No. 9750Place : HyderabadDate : 10 May 2013
Balance Sheet
OctoPlus N. V. 532
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the periodParticulars Note 15 February 2013 -
31 March 2013
IncomeOther income 2.13 5,898
Total revenue 5,898
ExpensesEmployee benefits expense 2.14 67,698Depreciation and amortization expense 2.7 5,631Other expenses 2.15 8,940
Total expenses 82,269
Profit / (Loss) before tax (76,371)Tax expense 2.19 Current tax - Deferred tax (966)
Profit / (Loss) for the period (75,405)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Jan H. Egberts Susan SwartePartner CEO CFOMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
OctoPlus N. V. 533
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act 1956, other pronouncements of Institute of Chartered Accountants of India andprovisions of Companies Act 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
OctoPlus N. V. 534
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value (NRV)is the estimated selling price in the ordinary course of the business, less the estimated costs ofcompletion and the estimated costs necessary to make the sale. Cost of inventories comprisesall cost of purchase, cost of conversion and other costs incurred in bringing the inventories totheir present location and condition.
The cost of all categories of inventory is determined using weighted average cost method.
d) Tangible assets and depreciationTangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intendeduse, as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of tangible fixed assets aregiven below:
YearsBuildings 10
e) Intangible assets and amortization
Intangible assets are recorded at the consideration paid for acquisition including any importduties and other taxes (other than those subsequently recoverable by the enterprise from thetaxing authorities), and any directly attributable expenditure on making the asset ready for itsintended use.
Intangible assets are amortised on a systematic basis over the best estimate of their usefullives, commencing from the date the asset is available to the Company for its use.
The management’s estimates of the useful lives for various categories of intangible assets areas follows:
Years
Goodwill 10
f) Retirement benefits
Contributions payable to employees, pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
OctoPlus N. V. 535
g) Foreign currency transactions, balances and translation of financial statementsForeign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
h) Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
i) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
j) LeasesThe lease arrangement is classified as either a finance lease or an operating lease, at theinception of the lease, based on the substance of the lease arrangement.
Finance leases
A finance lease is a lease that transfers substantially all the risks and rewards incident toownership of an asset. A finance lease is recognized as an asset and a liability at thecommencement of the lease, at the lower of the fair value of the asset and the present value ofthe minimum lease payments. Initial direct costs, if any, are also capitalized and, subsequent toinitial recognition, the asset is accounted for in accordance with the accounting policy applicableto that asset. Minimum lease payments made under finance leases are apportioned betweenthe finance expense and the reduction of the outstanding liability. The finance expense isallocated to each period during the lease term so as to produce a constant periodic rate ofinterest on the remaining balance of the liability.
Operating leases
Other leases are operating leases, and the leased assets are not recognized on the Company’sbalance sheet. Payments made under operating leases are recognized in the statement ofprofit and loss on a straight-line basis over the term of the lease.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
OctoPlus N. V. 536
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars 31 March 2013
2.1 : Share capitalAuthorised80,000,000 shares of Euro 0.12 each 685,412
Issued52,673,974 shares of Euro 0.12 each 451,292
Subscribed and paid-up52,673,974 shares of Euro 0.12 each 451,292
451,292
(a) Reconciliation of the equity shares outstanding is set out below:
Particulars No of Amountequity shares
Number of shares outstanding as at 15 February 2013 52,673,974 451,292Add : Shares issued during the period - -Number of shares outstanding as at 31 March 2013 52,673,974 451,292
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of Euro 0.12 per share.Each holder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013Particulars No of equity % of equity
shares held shares held
Reddy Netherlands B.V. 52,100,790 98.91
Notes to Financial Statements
Note 2 : Notes to Financial Statements
OctoPlus N. V. 537
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars 31 March 2013
2.2 : Reserves and surplusForeign currency translation reserveBalance as at 15 February 2013 -Additions / (deductions) during the period (10,905)
(10,905)Securities premium reserveBalance as at 15 February 2013 4,009,738Additions / (deductions) during the period -
4,009,738General ReserveBalance as at 15 February 2013 (457,462)Additions / (deductions) during the period -
(457,462)DeficitBalance as at 15 February 2013 (2,676,253)Add: Current period loss (75,405)Balance carried forward (2,751,658)
789,713
2.3 : Long term borrowingsLong term maturities of finance lease obligations 497,864Borrowings from holding company and other group companies 278,395
776,259
2.4 : Trade PayablesPayables to others 50,657
50,657
2.5 : Other current liabilitiesCurrent maturities of finance lease obligations 20,392Accrued expenses 103,879Due to statutory authorities 2,080Due to holding company and other group companies 202,145Other current liabilities 16,213
344,709
2.6 : Short term provisionsProvision for employee benefits 1,979
1,979
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
OctoP
lus N. V
.538
Notes to F
inancial Statem
ents
Note 2 : Notes to financial statements (Continued)
2.7 : Fixed assets (All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Gross Block Depreciation / Amortisation Net Block
Description As at Acqui- Addition Deletions Forex As at As at For the Deletions Forex As at As at
01.04.2012 sition 31.03.13 01.04.12 Year 31.03.13 31.03.13
Building - 420,388 - - (3,971) 416,417 - 3,782 - (56) 3,726 412,691
Total Tangible - 420,388 - - (3,971) 416,417 - 3,782 - (56) 3,726 412,691Assets (A)
Goodwill - 16,887 - - - 16,887 - - - - - 16,887
Total Intangible - 16,887 - - - 16,887 - - - - - 16,887Assets (B)
TOTAL (A+B) - 437,275 - - (3,971) 433,304 - 3,782 - (56) 3,726 429,578
OctoPlus N. V. 539
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars 31 March 2013
2.8 : Non current investmentsInvestments in Subsidiaries 1,465,776Less: Provision for decline, other than temporary,in the value of long term investments (1,465,776)
-
2.9 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months -Other debts Considered good 10,413Receivables from holding company and other group companies 1,023
11,436
2.10 : Cash and bank balancesCash on hand -Bank balances In current accounts 73,904
73,9042.11 : Short term loans and advances(Unsecured)Considered goodPrepaid expenses 29,818
29,818
2.12 : Other current assetsConsidered goodOther receivables from holding company and other group companies 1,868,922
1,868,922
For the periodParticulars 15 February 2013 -
31 March 2013
2.13 : Other incomeInterest income 5,835Foreign exchange gain, net 63
5,898
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
OctoPlus N. V. 540
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the periodParticulars 15 February 2013 -
31 March 2013
2.14 : Employee benefits expenseSalaries, wages and bonus 64,908Contribution to provident and other funds 1,409Staff welfare expenses 1,381
67,698
2.15 : Other expenseLegal and professional 1,960Other selling expenses 550Travelling and conveyance 76Rent 2,000Insurance 1,931Bank charges 12Auditors’ remuneration Audit fees 2,116Miscellaneous 295
8,940
2.16: Commitments and contingent liabilities
There were no commitments or contingent liabilities as at 31 March 2013.
2.17: Related Party Disclosures:
The company has the following amount due to/from related parties :
Particulars As at31 March 2013
i. Due to related parties (included in Long term borrowings)Reddy Netherlands B.V. 278,395
ii. Due from related parties (included in Trade receivables)Dr. Reddy’s Laboratories Limited 1,023
iii. Due from related parties (included in Other current assets)OctoShare B.V. 140,009OctoPlus Technologies B.V. 1,317,222Chienna B.V. 411,691
iv. Due to related parties (included in Other current liabilities)OctoPlus Sciences B.V. 77,230OctoPlus Development B.V. 124,792OctoPlus PolyActive Sciences B.V. 123
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
OctoPlus N. V. 541
2.18: Deferred Taxes
Deferred tax asset, net included in balance sheet comprises of the following:
Particulars As at31 March 2013
Deferred tax assets / (liabilities)Fixed Assets 951
Deferred tax asset, net 951
2.19: The tax expense for the company is computed and presented jointly with its subsidiary companiesas per the tax laws of Netherlands.
2.20: Comparative figures
Dr. Reddy's Laboratories Limited had acquired OctoPlus N.V. through its wholly owned stepdown subsidiary Reddy Netherlands B.V. on 15 February 2013, accordingly comparative figuresare not presented.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Jan H. Egberts Susan SwartePartner CEO CFOMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
OctoPlus PolyActive Sciences B.V. 542
Dear Members,
Your Directors present the Annual Report of the Company for the period 15 February 2013 to 31March 2013.
Reddy Netherlands B.V. (RNBV) acquired the controlling stake of 93.1% on 15 February 2013 in theCompany. As on 31 March 2013, RNBV has a total share holding of 98.91% in the Company.
Financial Highlights
The following table gives the financial highlights of the Company for the period 15 February 2013 to31 March 2013:
(` in Thousands)
Particulars 15 February 2013-31 March 2013
Loss for the period after taxation (4)Balance brought forward (24)Balance carried forward to Balance Sheet (28)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the 31 March 2013 and of loss of the Company for theperiod 15 February 2013 to 31 March 2013;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared these accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the period.
for and on behalf of the Board of Directors
Place: Hyderabad OctoPlus N.V.Date: 10 May, 2013 Director
DIRECTORS’ REPORT
OctoPlus PolyActive Sciences B.V. 543
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of OctoPlus PolyActive Sciences B.V., acompany incorporated and administered outside India, which comprise the Balance Sheet as at 31March 2013, and the Statement of Profit and Loss for the period 15 February 2013 to 31 March 2013,and a summary of significant accounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the loss for the period 15 February 2013 to 31March 2013; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
OctoPlus PolyActive Sciences B.V. 544
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
OctoPlus PolyActive Sciences B.V. 545
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars Note 31 March 2013
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 1,285Reserves and surplus 2.2 (62)
1,223Current liabilitiesOther current liabilities 2.3 13
13
TOTAL 1,236ASSETSCurrent assetsOther current assets 2.4 1,236
1,236
TOTAL 1,236
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao OctoPlus N.V.Partner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
OctoPlus PolyActive Sciences B.V. 546
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the periodParticulars Note 15 February 2013 -
31 March 2013
Income
Total revenue -
ExpensesBank charges 4
Total expenses 4
Profit / (Loss) before tax (4)Tax expense 2.7 Current tax - Deferred tax -
Profit / (Loss) for the period (4)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao OctoPlus N.V.Partner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
OctoPlus PolyActive Sciences B.V. 547
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act 1956, other pronouncements of Institute of Chartered Accountants of India andprovisions of Companies Act 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
OctoPlus PolyActive Sciences B.V. 548
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
e) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
OctoPlus PolyActive Sciences B.V. 549
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars 31 March 2013
2.1 : Share capitalAuthorised9,000,000 shares of Euro 0.01 each 6,426
Issued1,800,000 shares of Euro 0.01 each 1,285
Subscribed and paid-up1,800,000 shares of Euro 0.01 each 1,285
1,285
(a) Reconciliation of the equity shares outstanding is set out below:
Particulars No of Amountequity shares
Number of shares outstanding as at 15 February 2013 1,800,000 1,285Add : Shares issued during the period - -Number of shares outstanding as at 31 March 2013 1,800,000 1,285
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of Euro 0.01 per share.Each holder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013Particulars No of equity % of equity
shares held shares held
OctoPlus Sciences B.V. 1,800,000 100
Notes to Financial Statements
Note 2 : Notes to financial statements
OctoPlus PolyActive Sciences B.V. 550
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars 31 March 2013
2.2 : Reserves and surplusForeign currency translation reserveBalance as at 15 February 2013 -Additions / (deductions) during the period (34)
(34)
DeficitBalance as at 15 February 2013 (24)Add: Current period loss (4)
Balance carried forward (28)
(62)
2.3 Other current liabilitiesDue to holding company and other group companies 13
13
2.4 : Other current assetsConsidered goodOther receivables from holding companyand other group companies 1,236
1,236
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
OctoPlus PolyActive Sciences B.V. 551
2.5 : Commitments and contingent liabilities
There were no commitments or contingent liabilities as at 31 March 2013 (previous year – NIL).
2.6 : Related Party Disclosures:
The company has the following amount due to/from related parties :
Particulars As at31 March 2013
i. Due to related parties (included in Other current liabilities)OctoPlus Development B.V. 3OctoPlus Sciences B.V. 10
ii. Due from related parties (included in Other current assets)OctoPlus N.V. 123OctoPlus Sciences B.V. 1,113
2.7: The tax expense for the company is computed and presented together with the group company's(OctoPlus N.V. and its subsidiaries) financial as per the tax laws of Netherlands.
2.8: Comparative Figures :
The company is a 100% subsidiary of OctoPlus Sciences B.V. (100% subsidiary of OctoPlusN.V.). Dr. Reddy's Laboratories Limited had acquired OctoPlus N.V. through its wholly ownedstep down subsidiary Reddy Netherlands B.V. on 15 February 2013, accordingly comparativefigures are not presented.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao OctoPlus N.V.Partner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
OctoPlus Sciences B.V. 552
Dear Members,
Your Directors present the Annual Report of the Company for the period 15 February 2013 to 31March 2013.
Reddy Netherlands B.V. (RNBV) acquired the controlling stake of 93.1% on 15 February 2013 in theCompany. As on 31 March 2013, RNBV has a total share holding of 98.91% in the Company.
Financial Highlights
The following table gives the financial highlights of the Company for the period 15 February 2013 to31 March 2013:
(` in Thousands)
Particulars 15 February 2013-31 March 2013
Loss for the period after taxation (3,251)Balance brought forward (124,074)Balance carried forward to Balance Sheet (127,325)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of 31 March 2013 and of loss of the Company for the period15 February 2013 to 31 March 2013;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared these accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the period.
for and on behalf of the Board of Directors
Place: Hyderabad OctoPlus N.V.Date: 10 May 2013 Director
DIRECTORS’ REPORT
OctoPlus Sciences B.V. 553
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of OctoPlus Sciences B.V., a companyincorporated and administered outside India, which comprise the Balance Sheet as at 31 March2013, and the Statement of Profit and Loss for the period 15 February 2013 to 31 March 2013, and asummary of significant accounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the loss for the period 15 February 2013 to 31March 2013; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge and
OctoPlus Sciences B.V. 554
belief were necessary for the purpose of our audit;
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
OctoPlus Sciences B.V. 555
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars Note 31 March 2013
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 1,285Reserves and surplus 2.2 120,840
122,125
Current liabilitiesTrade payables 2.3 632Other current liabilities 2.4 59,277
59,909
TOTAL 182,034ASSETSNon current assetsFixed assets Intangible assets 2.5 80,223Non current investments 2.6 -
80,223Current assetsCash and bank balances 2.7 143Short term loans and advances 2.8 2,912Other current assets 2.9 98,756
101,811
TOTAL 182,034Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao OctoPlus N.V.Partner DirectorMembership No. 9750Place : HyderabadDate : 10 May 2013
Balance Sheet
OctoPlus Sciences B.V. 556
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the periodParticulars Note 15 February 2013 -
31 March 2013
IncomeInterest income 356
Total revenue 356
ExpensesDepreciation and amortization expense 2.5 2,841Legal and professional charges 766
Total expenses 3,607
Profit / (Loss) before tax (3,251)Tax expense 2.12 Current tax - Deferred tax -
Profit / (Loss) for the period (3,251)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao OctoPlus N.V.Partner DirectorMembership No. 9750Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
OctoPlus Sciences B.V. 557
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act 1956, other pronouncements of Institute of Chartered Accountants of India andprovisions of Companies Act 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
OctoPlus Sciences B.V. 558
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Intangible assets and amortization
Intangible assets are recorded at the consideration paid for acquisition including any importduties and other taxes (other than those subsequently recoverable by the enterprise from thetaxing authorities), and any directly attributable expenditure on making the asset ready for itsintended use.
Intangible assets are amortised on a systematic basis over the best estimate of their usefullives, commencing from the date the asset is available to the Company for its use.
The management’s estimates of the useful lives for various categories of intangible assets areas follows:
Years
Patents, trademarks, etc. (including marketing/ distribution rights) 3
e) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
f) Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
g) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
OctoPlus Sciences B.V. 559
h) Investments
Investments that are readily realisable and intended to be held for not more than one year fromthe date of acquisition are classified as current investments. All other investments are classifiedas non current investments.
Non current investments are carried at cost less any other-than-temporary diminution in value,determined separately for each individual investment. The reduction in the carrying amount isreversed when there is a rise in the value of the investment or if the reasons for the reductionno longer exist. Any reduction in the carrying amount and any reversal in such reductions arecharged or credited to the statement of profit and loss.
Current investments are carried at the lower of cost and fair value. The comparison of cost andfair value is done separately in respect of each category of investment.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
OctoPlus Sciences B.V. 560
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars 31 March 2013
2.1 : Share capitalAuthorised90,000 shares of Euro 1 each 6,426
Issued18,000 shares of Euro 1 each 1,285
Subscribed and paid-up18,000 shares of Euro 1 each 1,285
1,285
(a) Reconciliation of the equity shares outstanding is set out below:
Particulars No of Amountequity shares
Number of shares outstanding as at 15 February 2013 18,000 1,285Add : Shares issued during the period - -Number of shares outstanding as at 31 March 2013 18,000 1,285
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of Euro 1 per share. Eachholder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013Particulars No of equity % of equity
shares held shares held
OctoPlus N.V. 18,000 100
Notes to Financial Statements
Note 2 : Notes to financial statements
OctoPlus Sciences B.V. 561
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars 31 March 2013
2.2 : Reserves and surplusForeign currency translation reserveBalance as at 15 February 2013 -Additions / (deductions) during the period 14
14
Securities premium reserveBalance as at 15 February 2013 340,526Additions / (deductions) during the period -
340,526General ReserveBalance as at 15 February 2013 (92,375)Additions / (deductions) during the period -
(92,375)
DeficitBalance as at 15 February 2013 (124,074)Add: Current period loss (3,251)Balance carried forward (127,325)
120,840
2.3 : Trade PayablesPayable to others 632
632
2.4 : Other current liabilitiesOther current liabilities 326Due to holding company and other group companies 58,951
59,277
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
OctoP
lus Sciences B
.V.
562
Notes to F
inancial Statem
ents
2.5 : Fixed assets (All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Gross Block Amortisation Net Block
Description As at Acqui- Addition Deletions Forex As at As at For the Deletions Forex As at As at
01.04.2012 sition 31.03.2013 01.04.2012 Year 31.03.2013 31.03.2013
Intangibles - 83,546 - - (789) 82,757 - 2,841 - (307) 2,534 80,223
TOTAL - 83,546 - - (789) 82,757 - 2,841 - (307) 2,534 80,223
Note 2 : Notes to financial statements (Continued)
OctoPlus Sciences B.V. 563
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars 31 March 2013
2.6 : Non current investmentsInvestments in Subsidiaries 1,285Less: Provision for decline, other than temporary,in the value of long term investments (1,285)
-
2.7 : Cash and bank balancesCash on hand -Bank balances In current accounts 143
143
2.8 : Short term loans and advances(Unsecured)Considered goodPrepaid expenses 2,912
2,912
2.9 : Other current assetsConsidered goodOther receivables from holding companyand other group companies 98,756
98,756
Notes to Financial Statements
Note 2 : Notes to Financial Statements (Continued)
OctoPlus Sciences B.V. 564
2.10: Commitments and contingent liabilities
There were no commitments or contingent liabilities as at 31 March 2013.
2.11: Related Party Disclosures:
The company has the following amount due to/from related parties :
Particulars As at31 March 2013
i. Due from related parties (included in Other current assets)OctoShare B.V. 6,576OctoPlus N.V. 77,230OctoPlus Technologies B.V. 14,950
ii. Due to related parties (included in Other current liabilities)OctoPlus Development B.V. 53,142OctoPlus PolyActive Sciences B.V. 1,112Chienna B.V. 4,697
2.12: Tax expense for the company is computed and presented together with the parent company's(OctoPlus N.V.) financial as per the tax laws of Netherlands.
2.13: Comparative Figures :
The company is a 100% subsidiary of OctoPlus N.V.
Dr. Reddy's Laboratories Limited had acquired OctoPlus N.V. through its wholly owned stepdown subsidiary Reddy Netherlands B.V. on 15 February 2013, accordingly comparative figuresare not presented.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao OctoPlus N.V.Partner DirectorMembership No. 9750Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to Financial Statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
OctoPlus Technologies B.V. 565
Dear Members,
Your Directors present the Annual Report of the Company for the period 15 February 2013 to 31March 2013.
Reddy Netherlands B.V. (RNBV) acquired the controlling stake of 93.1% on 15 February 2013 in theCompany. As on 31 March 2013, RNBV has a total share holding of 98.91% in the Company.
Financial Highlights
The following table gives the financial highlights of the Company for the period 15 February 2013 to31 March 2013:
(` in Thousands)
Particulars 15 February 2013-31 March 2013
Loss for the period after taxation (36,158)Balance brought forward (1,846,537)Balance carried forward to Balance Sheet (1,882,695)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of 31 March 2013 and of loss of the Company for the period15 February 2013 to 31 March 2013;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared these accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the period.
for and on behalf of the Board of Directors
Place: Hyderabad OctoPlus N.V.Date: 10 May 2013 Director
DIRECTORS’ REPORT
OctoPlus Technologies B.V. 566
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of OctoPlus Technologies B.V., a companyincorporated and administered outside India, which comprise the Balance Sheet as at 31 March2013, and the Statement of Profit and Loss for the period 15 February 2013 to 31 March 2013, and asummary of significant accounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the loss for the period 15 February 2013 to 31March 2013; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
OctoPlus Technologies B.V. 567
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
OctoPlus Technologies B.V. 568
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars Note 31 March 2013
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 1,428Reserves and surplus 2.2 (2,618,178)
(2,616,750)Current liabilitiesShort term borrowings 2.3 12,919Trade payables 2.4 10,351Other current liabilities 2.5 2,635,703
2,658,973
TOTAL 42,223
ASSETSCurrent assetsTrade receivables 2.6 303Short term loans and advances 2.7 41,920
42,223
TOTAL 42,223Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao OctoPlus N.V.Partner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
OctoPlus Technologies B.V. 569
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the periodParticulars Note 15 February 2013 -
31 March 2013
IncomeService income 810Other income 459
Total revenue 1,269
ExpensesEmployee benefits expense 2.8 15,615Finance costs 2.9 21,398Other expenses 2.10 414
Total expenses 37,427
Profit / (Loss) before tax (36,158)Tax expense 2.13 Current tax - Deferred tax -
Profit / (Loss) for the period (36,158)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao OctoPlus N.V.Partner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
OctoPlus Technologies B.V. 570
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act 1956, other pronouncements of Institute of Chartered Accountants of India andprovisions of Companies Act 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
OctoPlus Technologies B.V. 571
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Retirement benefits
Contributions payable to employees, pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
e) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
f) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
OctoPlus Technologies B.V. 572
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars 31 March 2013
2.1 : Share capitalAuthorised2,000,000 shares of Euro 0.01 each 1,428
Issued2,000,000 shares of Euro 0.01 each 1,428
Subscribed and paid-up2,000,000 shares of Euro 0.01 each 1,428
1,428
(a) Reconciliation of the equity shares outstanding is set out below:
Particulars No of Amountequity shares
Number of shares outstanding as at 15 February 2013 2,000,000 1,428Add : Shares issued during the period - -Number of shares outstanding as at 31 March 2013 2,000,000 1,428
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of Euro 0.01 per share.Each holder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013Particulars No of equity % of equity
shares held shares held
OctoPlus N.V. 2,000,000 100
Notes to Financial Statements
Note 2 : Notes to financial statements
OctoPlus Technologies B.V. 573
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars 31 March 2013
2.2 : Reserves and surplusForeign currency translation reserveBalance as at 15 February 2013 -Additions / (deductions) during the period 498
498General ReserveBalance as at15 February 2013 (735,981)Additions / (deductions) during the period -
(735,981)DeficitBalance as at15 February 2013 (1,846,537)Add: Current period loss (36,158)
Balance carried forward (1,882,695)
(2,618,178)
2.3 : Short term borrowingsSecuredBank overdraft 12,919
12,919
2.4 : Trade PayablesPayable to others 10,351
10,351
2.5 : Other current liabilitiesDue to holding company and other group companies 2,602,201Accrued expenses 8,253Due to statutory authorities 2,062Other current liabilities 23,187
2,635,703
2.6 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months -Other debts Considered good 303
303Less: Provision for doubtful debts -
303
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
OctoPlus Technologies B.V. 574
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars 31 March 2013
2.7 : Short term loans and advances(Unsecured)Considered goodStaff loans and advances 10Prepaid expenses 921Short term advances to holding company andother group companies 40,989
41,920
For the periodParticulars 15 February 2013 -
31 March 2013
2.8 : Employee benefits expenseSalaries, wages and bonus 13,041Contribution to provident and other funds 2,398Staff welfare expenses 176
15,615
2.9 : Finance costsInterest Expenses 21,398
21,398
2.10 : Other expenseLegal and professional 217Travelling and conveyance 193Bank charges 1Miscellaneous 3
414
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
OctoPlus Technologies B.V. 575
2.11: Commitments and contingent liabilities
There were no commitments or contingent liabilities as at 31 March 2013.
2.12 : Related Party Disclosures:
The company has the following amount due to/from related parties :
Particulars As at31 March 2013
i. Due from related parties(included in short term loans and advances)OctoPlus Development B.V. 40,989
ii. Due to related parties (included in Other current liabilities)OctoPlus N.V. 1,317,221OctoPlus Sciences B.V. 14,951Chienna B.V. 191,477OctoShare B.V. 1,078,552
2.13: Tax expense for the company is computed and presented together with the parent company's(OctoPlus N.V.) financial as per the tax laws of Netherlands.
2.14: Comparative Figures :
The company is a 100% subsidiary of OctoPlus N.V.
Dr. Reddy's Laboratories Limited had acquired OctoPlus N.V. through its wholly owned stepdown subsidiary Reddy Netherlands B.V. on 15 February 2013, accordingly comparative figuresare not presented.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao OctoPlus N.V.Partner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
OctoShare B.V. 576
Dear Members,
Your Directors present the Annual Report of the Company for the period 15 February 2013 to 31March 2013.
Reddy Netherlands B.V. (RNBV) acquired the controlling stake of 93.1% on 15 February 2013 in theCompany. As on 31 March 2013, RNBV has a total share holding of 98.91% in the Company.
Financial Highlights
The following table gives the financial highlights of the Company for the period 15 February 2013 to31 March 2013:
(` in Thousands)
Particulars 15 February 2013-31 March 2013
Loss for the period after taxation (23,477)Balance brought forward 289,408Balance carried forward to Balance Sheet 265,931
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of 31 March 2013 and of loss of the Company for the period15 February 2013 to 31 March 2013;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared these accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the period.
for and on behalf of the Board of Directors
Place: Hyderabad OctoPlus N.V.Date: 10 May 2013 Director
DIRECTORS’ REPORT
OctoShare B.V. 577
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of OctoShare B.V. a company incorporatedand administered outside India, which comprise the Balance Sheet as at 31 March 2013, and theStatement of Profit and Loss for the period 15 February 2013 to 31 March 2013, and a summary ofsignificant accounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the loss for the period 15 February 2013 to 31March 2013; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
OctoShare B.V. 578
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
OctoShare B.V. 579
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars Note 31 March 2013
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 2,472Reserves and surplus 2.2 1,159,038
1,161,510Current liabilitiesShort term borrowings 2.3 21,836Trade payables 2.4 19,579Other current liabilities 2.5 333,102Short term provisions 2.6 249
374,766
TOTAL 1,536,276ASSETSNon current assetsFixed assets Tangible assets 2.7 478Long term loans and advances 2.8 31
509Current assetsCash and bank balances 2.9 27Short term loans and advances 2.10 7,007Other current assets 2.11 1,528,733
1,535,767
TOTAL 1,536,276Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao OctoPlus N.V.Partner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
OctoShare B.V. 580
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the periodParticulars Note 15 February 2013 -
31 March 2013
IncomeOther income 2.12 10,615
Total revenue 10,615
ExpensesEmployee benefits expense 2.13 25,154Depreciation and amortization expense 2.7 106Other expenses 2.14 8,832
Total expenses 34,092
Profit / (Loss) before tax (23,477)Tax expense 2.17 Current tax - Deferred tax -
Profit / (Loss) for the period (23,477)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao OctoPlus N.V.Partner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
OctoShare B.V. 581
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act 1956, other pronouncements of Institute of Chartered Accountants of India andprovisions of Companies Act 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used tosettle a liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option of
Notes to Financial Statements
OctoShare B.V. 582
the counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intendeduse, as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of tangible fixed assets aregiven below:
YearsFurniture, fixtures and office equipment (other than computer equipment) 3 to 5
f) Retirement benefits
Contributions payable to employees, pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
g) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
h) Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
OctoShare B.V. 583
i) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
OctoShare B.V. 584
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars 31 March 2013
2.1 : Share capitalAuthorised147,800 shares of Euro 46 each 485,415
Issued753 shares of Euro 46 each 2,472
Subscribed and paid-up753 shares of Euro 46 each 2,472
2,472
(a) Reconciliation of the equity shares outstanding is set out below:
Particulars No of Amountequity shares
Number of shares outstanding as at 15 February 2013 753 2,472Add : Shares issued during the period - -Number of shares outstanding as at 31 March 2013 753 2,472
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of Euro 46 per share.Each holder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013Particulars No of equity % of equity
shares held shares held
OctoPlus N.V. 753 100
Notes to Financial Statements
Note 2 : Notes to financial statements
OctoShare B.V. 585
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars 31 March 2013
2.2 : Reserves and surplusForeign currency translation reserveBalance as at 15 February 2013 -Additions / (deductions) during the period (66)
(66)General ReserveBalance as at 15 February 2013 893,173Additions / (deductions) during the period -
893,173SurplusBalance as at 15 February 2013 289,408Add: Current period loss (23,477)
Balance carried forward 265,931
1,159,038
2.3 : Short term borrowingsSecuredBank overdraft 21,836
21,836
2.4 : Trade PayablesPayables to others 19,579
19,579
2.5 : Other current liabilitiesAccrued expenses 14,487Due to statutory authorities 2,787Due to holding company and other group companies 293,381Other current liabilities 22,447
333,102
2.6 : Short term provisionsProvision for employee benefits 249
249
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
OctoS
hare B.V
.586
Notes to F
inancial Statem
ents
Note 2 : Notes to financial statements (Continued)
2.7 : Fixed assets (All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Gross Block Amortisation Net Block
Description As at Acqui- Addition Deletions Forex As at As at For the Deletions Forex As at As at
01.04.2012 sition 31.03.2013 01.04.2012 Year 31.03.2013 31.03.2013
Office equipment - 585 - - (1) 584 - 106 - - 106 478 -
TOTAL - 585 - - (1) 584 - 106 - - 106 478 -
OctoShare B.V. 587
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As atParticulars 31 March 2013
2.8 : Long term loans and advances(Unsecured)Considered goodSecurity Deposits 31
31
2.9 : Cash and bank balancesCash on hand 27
27
2.10 : Short term loans and advances(Unsecured)Considered goodStaff loans and advances 7Prepaid expenses 5,749Other advances 1,251
7,007
2.11 : Other current assetsConsidered goodOther receivables from holding companyand other group companies 1,528,733
1,528,733
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
OctoShare B.V. 588
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the periodParticulars 15 February 2013 -
31 March 2013
2.12 : Other incomeInterest income 10,615
10,615
2.13 : Employee benefits expenseSalaries, wages and bonus 19,887Contribution to provident and other funds 3,367Staff welfare expenses 1,900
25,154
2.14 : Other expenseLegal and professional 1,542Carriage outward 2Rates and taxes 410Other selling expenses 363Maintenance costs 1,568Power and fuel 2,629Travelling and conveyance 689Communication 523Rent 110Foreign exchange loss, net 10Printing and stationery 158Bank charges 4Miscellaneous 824
8,832
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
OctoShare B.V. 589
2.15: Commitments and contingent liabilities
There were no commitments or contingent liabilities as at 31 March 2013.
2.16 : Related Party Disclosures:
The company has the following amount due to/from related parties :
Particulars As at31 March 2013
i. Due from related parties (included in Other current assets)OctoPlus Development B.V. 450,181OctoPlus Technologies B.V. 1,078,552
ii. Due to related parties (included in Other current liabilities)OctoPlus N.V. 140,009OctoPlus Sciences B.V. 6,576Chienna B.V. 146,796
2.17: Tax expense for the company is computed and presented together with the parent company's(OctoPlus N.V.) financial as per the tax laws of Netherlands.
2.18: Comparative Figures :
The company is a 100% subsidiary of OctoPlus N.V.
Dr. Reddy's Laboratories Limited had acquired OctoPlus N.V. through its wholly owned stepdown subsidiary Reddy Netherlands B.V. on 15 February 2013, accordingly comparative figuresare not presented.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao OctoPlus N.V.Partner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
OOO Alfa 590
Dear Members,
Your Directors present this report of the Company for the period from 1 April 2012 to 16 July 2012. TheCompany was sold on 16 July 2012.
Financial Highlights
The following table gives the financial highlights of the Company for the period from 1 April 2012 to 16July 2012 as compared to previous financial year:
(` in Thousands)
Particulars 01 April 2012 - 01 April 2011 -16 July 2012 31 March 2012
Loss for the period after taxation (3,456) (23,966)Balance brought forward (1,053) 22,913Deficiency transferred to Share Capital 4,509 -Balance carried forward to Balance Sheet - (1,053)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followed alongwith proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company for the period ended 16 July 2012 and of loss of the Company for thatperiod;
3. We have taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of this Act for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the period.
for and on behalf of the Board of Directors
Place: Hyderabad Satish ReddyDate: 16 July 2012 Director
DIRECTORS’ REPORT
OOO Alfa 591
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of OOO Alfa, a company incorporated andadministered outside India, which comprise the Balance Sheet as at 16 July 2012, and the Statementof Profit and Loss for the period 1 April 2012 to 16 July 2012, and a summary of significant accountingpolicies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicable andrelevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carried outfor the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by management, as well as evaluating the overall presentation of thefinancial statements. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 16 July 2012; and
(b) in the case of the Statement of Profit and Loss, of the loss for the period 1 April 2012 to 16 July2012; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
b. in our opinion proper books of account as required by law have been kept by the Company so faras appears from our examination of those books to the extent applicable and relevant to a
OOO Alfa 592
company incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreement withthe books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to the extentapplicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 16 July 2012
OOO Alfa 593
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 16 July 2012 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 - 4,509Reserves and surplus 2.2 - (1,053)
- 3,456Current liabilitiesOther current liabilities 2.3 - 29
- 29
TOTAL - 3,485ASSETSCurrent assetsCash and bank balances 2.4 - 3,178Short term loans and advances 2.5 - 307
- 3,485
TOTAL - 3,485
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish ReddyPartner DirectorMembership No. 9750
Place : HyderabadDate : 16 July 2012
Balance Sheet
OOO Alfa 594
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the period For the periodParticulars Note 01 April 2012- 01 April 2011-
16 July 2012 31 March 2012
IncomeOther operating revenues 9 -
Revenue from operations 9 -Other income 2.6 - 3,297
Total revenue 9 3,297
ExpensesEmployee benefits expense 2.7 41 179Depreciation and amortization expense 1 2Other expenses 2.8 3,423 27,082
Total expenses 3,465 27,263
Profit / (Loss) before tax (3,456) (23,966)Tax expense Current tax - - Deferred tax - -
Profit / (Loss) for the period (3,456) (23,966)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish ReddyPartner DirectorMembership No. 9750
Place : HyderabadDate : 16 July 2012
Statement of Profit and Loss
OOO Alfa 595
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) of CompaniesAct, 1956, other pronouncements of Institute of Chartered Accountants of India, provisions ofCompanies Act, 1956.
The financial statements have been prepared based on books, records and other returns maintainedby the subsidiary. The financial statements have been presented in Indian Rupees, for thelimited purpose of complying with section 212 of the Companies Act, 1956.
During the current year the Board of directors of the Company resolved to dispose the entity andconsequently, on 16 July 2012 the outstanding equity shares in the Company were sold to a thirdparty.
b) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Notes to Financial Statements
OOO Alfa 596
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 16 July 2012 31 March 2012
2.1 : Share capitalAuthorisedNil (previous year 500,000) shares of RUB 1 each - 4,509
IssuedNil (previous year 500,000) shares of RUB 1 each - 4,509
Subscribed and paid-up500,000 (previous year 500,000) shares of RUB 1 each 4,509 4,509Less : Balance in surplus account transferred toShare capital on sale of entity (4,509) -
Nil (previous year 500,000) shares of RUB 1 each - 4,509
(a) Reconciliation of the equity shares outstanding is set out below:
As at 16 July 2012 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 500,000 4,509 500,000 4,509Less: On sale of the entity (500,000) (4,509) - -
Number of shares outstandingat the end of the year - - 500,000 4,509
(b) Details of shareholders holding more than 5% shares in the company
As at 16 July 2012 As at 31 March 2012Particulars No. of Equity % equity No. of Equity % equity
shares held shares held shares held shares held
Dr. Reddy's Laboratories Limited - - 500,000 100
Notes to Financial Statements
Note 2 : Notes to Financial Statements
OOO Alfa 597
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 16 July 2012 31 March 2012
2.2 : Reserves and surplusDeficitBalance at the beginning of the year (1,053) 22,913Add: Current period loss (3,456) (23,966)Add: Transferred to Share capital on sale of entity 4,509 -
Balance carried forward - (1,053)
2.3 : Other current liabilitiesOther current liabilities - 29
- 29
2.4 : Cash and bank balancesCash on hand - -Bank balances In current accounts - 3,178
- 3,1782.5 : Short term loans and advancesUnsecuredConsidered goodAdvance tax, net of provision for income taxes - 160Balances with statutory agencies - 58Prepaid expenses - 89
- 307
OOO Alfa 598
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the year period For the periodParticulars 01 April 2012- 01 April 2011-
16 July 2012 31 March 2012
2.6 : Other incomeInterest income - 825Foreign exchange gain, net - 2,472
- 3,297
2.7 : Employee benefits expenseSalaries, wages and bonus 41 179
41 179
2.8 : Other expenseLegal and professional 325 9Rates and taxes 425 4,113Communication - 17Foreign exchange loss, net 43 -Bank charges 31 193Auditors’ remuneration Audit fees - 12Miscellaneous 2,599 22,738
3,423 27,082
OOO Alfa 599
2.9: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.10: All of the equity shares in the company were sold on 16 July 2012.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish ReddyPartner DirectorMembership No. 9750
Place : HyderabadDate : 16 July 2012
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
OOO Dr. Reddy’s Laboratories Limited 600
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Lakhs)
Particulars 31 March 2013 31 March 2012
Loss for the period after taxation (185) (574)Balance brought forward 243 817Balance carried forward to Balance Sheet 58 243
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Satish ReddyPlace : Hyderabad DirectorDate : 10 May 2013
DIRECTORS’ REPORT
OOO Dr. Reddy’s Laboratories Limited 601
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of OOO Dr. Reddy’s Laboratories Limited,a company incorporated and administered outside India, which comprise the Balance Sheet as at 31March 2013, and the Statement of Profit and Loss for the year ended, and a summary of significantaccounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
OOO Dr. Reddy’s Laboratories Limited 602
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
OOO Dr. Reddy’s Laboratories Limited 603
(All amounts in Indian Rupees lakhs, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 718 718Reserves and surplus 2.2 58 243
776 961Current liabilitiesTrade payables 2.3 89,476 64,076Other current liabilities 2.4 13,324 8,291Short term provisions 2.5 1,050 227
103,850 72,594
TOTAL 104,626 73,554ASSETSNon current assetsFixed assets Tangible assets 2.6 326 305Deferred tax assets, net 2.21 3,606 1,969Long term loans and advances 2.7 674 612
4,606 2,886Current assetsInventories 2.8 23,111 15,044Trade receivables 2.9 63,509 51,321Cash and bank balances 2.10 3,710 2,497Short term loans and advances 2.11 2,189 1,044Other current assets 2.12 7,501 763
100,020 70,669
TOTAL 104,626 73,554
Significant accounting policies 1
Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish ReddyPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
OOO Dr. Reddy’s Laboratories Limited 604
(All amounts in Indian Rupees lakhs, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeSales, net 139,692 110,561Other operating revenues 6,961 8,804
Revenue from operations 146,653 119,365Other income 2.13 361 36
Total revenue 147,014 119,401
ExpensesPurchase of stock-in-trade (traded goods) 138,700 109,129Changes in inventories of finished goods,work-in-progress and Stock-in-trade 2.14 (8,066) (3,426)Employee benefits expense 2.15 3,394 2,473Finance costs 2.16 26 9Depreciation and amortization expense 2.6 166 167Other expenses 2.17 12,434 11,153
Total expenses 146,654 119,505
Profit / (loss) before tax 360 (104)Tax expense Current tax 2,182 580 Deferred tax (1,638) (111)
Profit / (loss) for the year (185) (574)Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish ReddyPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
OOO Dr. Reddy’s Laboratories Limited 605
Note 1: Significant accounting policies(All amounts in Indian Rupees lakhs, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act, 1956, other pronouncements of Institute of Chartered Accountants of Indiaand provisions of Companies Act, 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
OOO Dr. Reddy’s Laboratories Limited 606
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees lakhs, except share data and where otherwise stated)
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value (NRV)is the estimated selling price in the ordinary course of the business, less the estimated costs ofcompletion and the estimated costs necessary to make the sale. Cost of inventories comprisesall cost of purchase, cost of conversion and other costs incurred in bringing the inventories totheir present location and condition.
The cost of all categories of inventory is determined using weighted average cost method.
e) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intendeduse, as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000 are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of tangible fixed assets aregiven below:
YearsFurniture, fixtures and office equipment (other than computer equipment) 3 to 5
Computer equipment 3
Vehicles 3 to 5
f) Retirement benefits
Contributions payable to employee pension and social security schemes which are definedcontribution schemes are charged to the statement of profit and loss.
g) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
OOO Dr. Reddy’s Laboratories Limited 607
h) Income-tax expense
Income tax expense comprises current tax and deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and thecorresponding deferred tax liabilities or assets are recognised using the tax rates that havebeen enacted or substantially enacted by the balance sheet date. Deferred tax assets arerecognised only to the extent there is reasonable certainty that the assets can be realised infuture; however, where there is unabsorbed depreciation or carry forward of losses, deferredtax assets are recognised only if there is a virtual certainty of realisations of such assets.Deferred tax assets are reviewed as at each balance sheet date and written-down or written-upto reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.
Deferred tax assets and liabilities are offset where the Company has a legally enforceable rightto set-off assets against liabilities representing current tax, and where such assets and liabilitiesrelate to taxes on income levied by the same governing taxation laws.
i) Revenue Recognition
Sale of goods
Revenue from sale of goods is recognised when significant risks and rewards in respect ofownership of products are transferred to customers. Revenue from product sales is statedexclusive of returns, sales tax and applicable trade discounts and allowances.
Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
j) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees lakhs, except share data and where otherwise stated)
OOO Dr. Reddy’s Laboratories Limited 608
(All amounts in Indian Rupees lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capital
Authorised46,294,632 (previous year 46,294,632)Equity shares of RUB 1 each 718 718
Issued46,294,632 (previous year 46,294,632)Equity shares of RUB 1 each 718 718
Subscribed and paid-up46,294,632 (previous year 46,294,632)Equity shares of RUB 1 each 718 718
718 718
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 46,294,632 718 46,294,632 718Add: Share issued during the year - - - -
Number of shares outstandingat the end of the year 46,294,632 718 46,294,632 718
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of RUB 1 per share. Eachholder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars No. of Equity % equity No. of Equity % equity
shares held shares held shares held shares held
Dr. Reddy's Laboratories Ltd. 46,294,632 100 46,294,632 100
Notes to Financial Statements
Note 2 : Notes to financial statements
OOO Dr. Reddy’s Laboratories Limited 609
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplus
SurplusBalance at the beginning of the year 243 817Add: Current year loss (185) (574)
58 243
2.3 : Trade PayablesPayables to holding company and other group companies 87,338 63,158Payables to others 2,138 918
89,476 64,076
2.4 : Other current liabilitiesOther current liabilities 13,324 8,291
13,324 8,291
2.5 : Short term provisionsProvision for employee benefits 173 101Income tax payable 877 126
1,050 227
OO
O D
r. Reddy’s Laboratories Lim
ited610
2.6 : Fixed assets (All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Gross Block Depreciation Net Block
Description As at Addi- Dele- Forex As at As at For the Deletions Forex As at As at As at01.04.2012 tions tions 31.03.2013 01.04.2012 Year 31.03.2013 31.03.2013 31.03.2012
Plant & Machinery 5 - - - 5 4 1 - - 5 - 1
Furniture, Fixtures & 103 4 5 - 102 25 39 4 - 60 42 78
Office Equipments
Vehicles 303 194 37 - 460 117 123 26 - 214 246 186
Computers 261 - - - 261 220 3 - - 223 38 41
Total Tangible 672 198 42 - 828 367 166 30 - 502 326 305
Assets
Previous year 477 267 71 - 672 258 167 57 - 367 305
Notes to F
inancial Statem
ents
Note 2 : Notes to financial statements (Continued)
OOO Dr. Reddy’s Laboratories Limited 611
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.7: Long term loans and advances(Unsecured)Considered goodLoan to holding company and other group companies 573 516Security Deposits 101 96
674 612
2.8 : Inventories(Valued on weighted average basis)Work-in-progress - 83Stock-in-trade (in respect of goods acquired for trading) 23,109 14,960Packing materials 2 1
23,111 15,044
2.9 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months Considered good 3,686 - Considered doubtful 1,748 1,617Other debts Considered good 59,823 51,321
65,257 52,938Less: Provision for doubtful debts (1,748) (1,617)
63,509 51,321
2.10 : Cash and bank balancesCash on hand 1 5Bank balances In current accounts 3,709 2,492
3,710 2,497
OOO Dr. Reddy’s Laboratories Limited 612
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.11 : Short term loans and advances(Unsecured)Considered goodAdvances to material suppliers 363 170Staff loans and advances 24 17Balances with Statutory Agencies 1,689 777Prepaid expenses 2 17Other Advances 111 63
2,189 1,044
2.12 : Other current assetsConsidered goodOther receivables from holding companyand other group companies 7,501 763
7,501 763
OOO Dr. Reddy’s Laboratories Limited 613
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees lakhs, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.13 : Other incomeInterest income 35 31Profit on sale of fixed assets, net 10 5Foreign exchange gain, net 316 -
361 36
2.14 : Changes in inventories of finished goods, workin progress and stock in tradeNet (increase) / decrease in stockOpening
Work-in-progress 83 -Stock in trade 14,960 15,043 11,616 11,616
ClosingWork-in-progress - 83Stock in trade 23,109 23,109 14,960 15,043
Net (increase) (8,066) (3,426)
2.15 : Employee benefits expenseSalaries, wages and bonus 2,637 2,002Contribution to provident and other funds 504 366Staff welfare expenses 253 105
3,394 2,473
2.16 : Finance costsInterest Expenses 26 9
26 9
OOO Dr. Reddy’s Laboratories Limited 614
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees lakhs, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.17 : Other expenseLegal and professional 71 102Carriage outward 126 91Rates and taxes 5 -Other selling expenses 1,807 650Travelling and conveyance 353 200Communication 89 54Rent 871 666Insurance 100 75Foreign exchange loss, net - 1,429Provision - Advances & Debtors 118 -Bad debts 72 -Printing and stationery 63 48Bank charges 49 43Auditors’ remuneration Audit fees 66 50Advertisements 8,372 7,495Miscellaneous 272 250
12,434 11,153
2.18: Commitments and contingent liabilities
There were no commitments or contingent liabilities as at 31 March 2013 (previous year: Nil).
2.19: Related party disclosures
The company has the following amount due to/from related parties :
As at As atParticulars 31 March 2013 31 March 2012
i) Due to related parties (included in Trade Payables):Dr. Reddy’s Laboratories Limited 75,588 26,134Dr. Reddy’s Laboratories SA 11,750 37,024
ii) Due from related parties(included in long term loans andadvances and other current assets):OOO DRS LLC 573 516Dr. Reddy’s Laboratories Limited 6,712 54Dr. Reddy’s Laboratories SA 789 709
OOO Dr. Reddy’s Laboratories Limited 615
2.20: Deferred taxation
Deferred tax liability, net included in the balance sheet comprises the following:
Particulars As at As at31 March 2013 31 March 2012
Deferred tax assets / (liabilities)Trade receivables 6 5Inventories 200 111Other Current Assets 183 194Current Liabilities 3,227 1,666Fixed assets (10) (7)
Deferred tax asset, net 3,606 1,969
2.21: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.22: The Company, incorporated in Russia, is a 100% subsidiary of Dr. Reddy’s Laboratories Limited.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish ReddyPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees lakhs, except share data and where otherwise stated)
OOO DRS LLC 616
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012
Loss for the period after taxation (21,665) (17,613)Balance brought forward (33,653) (16,040)Balance carried forward to Balance Sheet (55,318) (33,653)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Directors
During the year under review, Mr. M. V. Ramana has resigned and Ms. Anna Kuzmina has beenappointed as a Director.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place : Hyderabad Anna KuzminaDate : 10 May 2013 Director
DIRECTORS’ REPORT
OOO DRS LLC 617
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of OOO DRS LLC, a company incorporatedand administered outside India, which comprise the Balance Sheet as at 31 March 2013, and theStatement of Profit and Loss for the year ended, and a summary of significant accounting policies andother explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
OOO DRS LLC 618
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
OOO DRS LLC 619
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 29,520 29,520Reserves and surplus 2.2 67,336 89,001
96,856 118,521
Non current liabilitiesLong term borrowings 2.3 91,699 85,680
91,699 85,680Current liabilitiesOther current liabilities 2.4 43,717 43,501
43,717 43,501
TOTAL 232,272 247,702ASSETSNon current assetsFixed assets Tangible assets 2.5 206,990 222,587 Capital work-in-progress 6,815 6,815
213,805 229,402Current assetsCash and bank balances 2.6 429 575Short term loans and advances 2.7 18,038 17,725
18,467 18,300
TOTAL 232,272 247,702
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Anna KuzminaPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
OOO DRS LLC 620
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
Income
Total revenue - -
ExpensesFinance costs 2.8 3,481 3,083Depreciation and amortization expense 2.5 1,173 388Other expenses 2.9 17,011 14,142
Total expenses 21,665 17,613
Profit / (Loss) before tax (21,665) (17,613)Tax expense Current tax - - Deferred tax - -
Profit / (Loss) for the year (21,665) (17,613)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Anna KuzminaPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
OOO DRS LLC 621
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3c) of theCompanies Act, 1956, other pronouncements of the Institute of Chartered Accountants of Indiaand provisions of the Companies Act, 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
OOO DRS LLC 622
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
e) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
OOO DRS LLC 623
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorisedRUB 18,420,000 (previous year 18,420,000)* 29,520 29,520
IssuedRUB 18,420,000 (previous year 18,420,000)* 29,520 29,520
Subscribed and paid-upRUB 18,420,000 (previous year 18,420,000)* 29,520 29,520
29,520 29,520* No concept of nature and number of shares in this company
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year 122 122Additions / (deductions) during the year - -
122 122Securities premium reserveBalance at the beginning of the year 122,532 122,532Additions / (deductions) during the year - -
122,532 122,532
DeficitBalance at the beginning of the year (33,653) (16,040)Add: Current year loss (21,665) (17,613)Balance carried forward (55,318) (33,653)
67,336 89,001
2.3 : Long term borrowingsUnsecuredBorrowings from holding company and other group companies 91,699 85,680
91,699 85,680
2.4 : Other current liabilitiesOther current liabilities 43,717 43,501
43,717 43,501
Notes to Financial Statements
Note 2 : Notes to financial statements
OO
O D
RS
LLC624
Notes to F
inancial Statem
ents
2.5 : Fixed assets (All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Gross Block Depreciation Net Block
Description As at Additions Deletions Forex As at As at For the Deletions Forex As at As at As at
01.04.2012 31.03.2013 01.04.2012 year 31.03.2013 31.03.2013 31.03.2012
Land 219,851 - 14,402 - 205,449 - - - - - 205,449 219,851
Building 3,847 - 25 - 3,822 1,111 1,173 3 - 2,281 1,541 2,736
Total Tangible 223,698 - 14,427 - 209,271 1,111 1,173 3 - 2,281 206,990 222,587Assets
Previous year 223,697 1 - - 223,698 723 388 - - 1,111 222,587
Note 2 : Notes to financial statements (Continued)
OOO DRS LLC 625
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.6 : Cash and bank balancesCash on hand - -Bank balances In current accounts 429 575
429 575
2.7 : Short term loans and advances(Unsecured)Considered goodBalances with Statutory Agencies 342 688Other Advances 17,696 17,037
18,038 17,725
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.8 : Finance costsInterest Expenses 3,481 3,083
3,481 3,083
2.9 : Other expenseLegal and professional 1,020 723Rates and taxes 974 1,407Foreign exchange loss, net 1,047 12,011Bank charges 3 1Miscellaneous 13,967 -
17,011 14,142
OOO DRS LLC 626
2.10 : Related party Transactions:
The company has the following related party transactions:
Particulars As at As at31 March 2013 31 March 2012
i) Due to related parties(included in Long term borrowings):OOO Dr. Reddy’s Laboratories Limited 57,259 51,562Reddy Antilles N.V. 34,440 34,118
2.11 : Commitments and contingent liabilities
There were no commitments and contingent liabilities as at 31 March 2013 (previous year: `Nil).
2.12: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.13: The Company, incorporated under the laws of Russia, is a 100% subsidiary of EurobridgeConsulting B.V.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Anna KuzminaPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Promius Pharma LLC 627
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Lakhs)
Particulars 31 March 2013 31 March 2012
Loss for the period after taxation (6,390) (4,540)Balance brought forward (24,148) (19,608)Balance carried forward to Balance Sheet (30,538) (24,148)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place : Hyderabad Satish Reddy G.V. PrasadDate : 10 May 2013 Director Director
DIRECTORS’ REPORT
Promius Pharma LLC 628
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Promius Pharma LLC, a companyincorporated and administered outside India, which comprise the Balance Sheet as at 31 March2013, and the Statement of Profit and Loss for the year ended, and a summary of significant accountingpolicies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Promius Pharma LLC 629
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Promius Pharma LLC 630
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars Note31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 17,123 17,123Reserves and surplus 2.2 (30,179) (23,390)
(13,056) (6,267)
Non current liabilitiesLong term borrowings 2.3 3 15Other long term liabilities 2.4 1,293 1,475
1,296 1,490Current liabilitiesShort term borrowings 2.3 - 12Trade payables 2.5 178 55Other current liabilities 2.4 31,250 24,158Short term provisions 2.6 1,620 799
33,048 25,024
TOTAL 21,288 20,247ASSETSNon current assetsFixed assets Tangible assets 2.7 19 28 Intangible assets 2.7 16,221 17,822 Capital work-in-progress - 83Long term loans and advances 2.8 8 -
16,248 17,933Current assetsInventories 2.9 575 493Trade receivables 2.10 2,677 952Cash and bank balances 2.11 300 227Short term loans and advances 2.12 1,232 524Other current assets 2.13 256 118
5,040 2,314
TOTAL 21,288 20,247Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G.V. PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Promius Pharma LLC 631
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeSales, net 14,682 10,776Other operating revenues 91 446
Total revenue 14,773 11,222
ExpensesPurchase of stock-in-trade (traded goods) 1,459 2,030Changes in inventory of stock-in-trade 2.14 (82) (305)Conversion charges 68 3Employee benefits expense 2.15 6,297 4,883Finance costs 2.16 32 -Depreciation and amortization expense 2.7 2,814 2,686Research and development 1,634 332Other expenses 2.17 8,941 6,133
Total expenses 21,163 15,763
Profit / (Loss) before tax (6,390) (4,541)Tax expense 2.19 Current tax - - Deferred tax - -
Profit / (Loss) for the year (6,390) (4,541)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G.V. PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Promius Pharma LLC 632
Note 1: Significant accounting policies(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act 1956, other pronouncements of Institute of Chartered Accountants of India andprovisions of Companies Act 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
Promius Pharma LLC 633
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Retirement benefits
Contributions payable to employees, pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
e) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date,not covered by forward exchange contracts, are translated at year-end rates. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsare recorded at the rates prevailing on the date of the transaction.
f) Inventories
Inventories are valued at the lower of cost and net realisable value. Net realisable value (NRV)is the estimated selling price in the ordinary course of the business, less the estimated costs ofcompletion and the estimated costs necessary to make the sale. Cost of inventories comprisesall cost of purchase, cost of conversion and other costs incurred in bringing the inventories totheir present location and condition.
The cost of all categories of inventory is determined using weighted average cost method.
g) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intendeduse, as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000/- are depreciated in full in the year of acquisition.
Management’s estimates of the useful lives for various categories of tangible fixed assets aregiven below:
YearsFurniture, fixtures and office equipment (other than computer equipment) 3 to 5Computer equipment 3
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Promius Pharma LLC 634
h) Intangible assets and amortisation
Intangible assets are recorded at the consideration paid for acquisition including any importduties and other taxes (other than those subsequently recoverable by the enterprise from thetaxing authorities), and any directly attributable expenditure on making the asset ready for itsintended use.
Intangible assets are amortised on a systematic basis over the best estimate of their usefullives, commencing from the date the asset is available to the Company for its use.
The management’s estimates of the useful lives for various categories of intangible assets areas follows:
YearsPatents, trademarks, etc. (including marketing/ distribution rights) 8
i) Provisions and contingent liabilities
The Company creates a provision when there is a present obligation as a result of a past eventthat probably requires an outflow of resources and a reliable estimate can be made of theamount of the obligation. A disclosure for a contingent liability is made when there is a possibleobligation or a present obligation that may, but probably will not, require an outflow of resources.Where there is possible obligation or a present obligation in respect of which the likelihood ofoutflow of resources is remote, no provision or disclosure is made.
j) Revenue recognition
Sale of goods
Revenue from sale of goods is recognised when significant risks and rewards in respect ofownership of products are transferred to customers. Revenue from product sales is statedexclusive of returns, sales tax and applicable trade discounts and allowances.
Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
k) Research and development
Expenditures on research activities undertaken with the prospect of gaining new scientific ortechnical knowledge and understanding are recognized in the statement of profit and losswhen incurred.
Development activities involve a plan or design for the production of new or substantially improvedproducts and processes. Development expenditures are capitalized only if:
l Development costs can be measured reliably;
l The product or process is technically and commercially feasible;
l Future economic benefits are probable; and
l The Company intends to and has sufficient resources to complete development and hasthe ability to use or sell the asset.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Promius Pharma LLC 635
Expenditure incurred on fixed assets used for research and development is capitalised anddepreciated in accordance with the depreciation policy of the Company.
l) Leases
The lease arrangement is classified as either a finance lease or an operating lease, at theinception of the lease, based on the substance of the lease arrangement.
Finance leases
A finance lease is a lease that transfers substantially all the risks and rewards incident toownership of an asset. A finance lease is recognized as an asset and a liability at thecommencement of the lease, at the lower of the fair value of the asset and the present value ofthe minimum lease payments. Initial direct costs, if any, are also capitalized and, subsequent toinitial recognition, the asset is accounted for in accordance with the accounting policy applicableto that asset. Minimum lease payments made under finance leases are apportioned betweenthe finance expense and the reduction of the outstanding liability. The finance expense isallocated to each period during the lease term so as to produce a constant periodic rate ofinterest on the remaining balance of the liability.
Operating leases
Other leases are operating leases, and the leased assets are not recognized on the Company’sbalance sheet. Payments made under operating leases are recognized in the statement ofprofit and loss on a straight-line basis over the term of the lease.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Notes to Financial Statements
Promius Pharma LLC 636
Notes to Financial Statements
Note 2 : Notes to financial statements
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorisedUSD 38,760,000 (previous year 38,760,000)* 17,123 17,123
IssuedUSD 38,760,000 (previous year 38,760,000)* 17,123 17,123
Subscribed and paid-upUSD 38,760,000 (previous year 38,760,000)* 17,123 17,123
17,123 17,123 * No concept of nature and number of shares in this company
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year 753 1,060Additions / (deductions) during the year (399) (307)
354 753Securities premium reserveBalance at the beginning of the year 5 5Additions / (deductions) during the year - -
5 5DeficitBalance at the beginning of the year (24,148) (19,608)Add: Current year loss (6,390) (4,540)Balance carried forward (30,538) (24,148)
(30,179) (23,390)
2.3 : Borrowingsa) Long term borrowings
SecuredLong term maturities of finance lease obligations 3 15
3 15b) Short term borrowings
UnsecuredOther short term loans - 12
- 12
Promius Pharma LLC 637
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.4 : Other liabilitiesa) Other long term liabilities
Other Liabilities - Non Current 1,293 1,475
1,293 1,475b) Other current liabilities
Current maturities of finance lease obligations 14 -Due to capital creditors 3 -Due to holding company and other group companies 27,065 22,263Accrued expenses 2,918 1,256Salary and Bonus payable 714 482Other current liabilities 536 157
31,250 24,158
2.5 : Trade PayablesPayables to others 178 55
178 55
2.6 : Short term provisionsProvision for employee benefits 15 14Other provisions Allowance for sales returns 1,605 785
1,620 799
Prom
ius Pharm
a LLC638
Notes to F
inancial Statem
ents
Note 2 : Notes to financial statements (continued)
2.7 : Fixed assets (All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Gross Block Depreciation / Amortisation Net Block
Description As at Additions Deletions Forex As at As at For the Deletions Forex As at As at As at
01.04.2012 31.03.2013 01.04.2012 year 31.03.2013 31.03.2013 31.03.2012
Electrical/ 2 1 - 1 4 - - - - - 4 2Office equipment
Computers 218 - - 12 230 192 13 - 10 215 15 26
Total Tangible 220 1 - 13 234 192 13 - 10 215 19 28Assets (A)
Intangibles 22,734 - - 1,524 24,258 4,912 2,801 - 324 8,037 16,221 17,822
Total Intangible 22,734 - - 1,524 24,258 4,912 2,801 - 324 8,037 16,221 17,822Assets (B)
TOTAL (A+B) 22,954 1 - 1,537 24,492 5,104 2,814 - 334 8,252 16,240 17,850
Previous year 20,938 1,008 - 1,008 22,954 1,904 2,686 - 514 5,104 17,850
Promius Pharma LLC 639
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.8 : Long term loans and advances(Unsecured)Considered goodSecurity deposits 8 -
8 -
2.9 : Inventories(Valued on weighted average basis)Stock-in-trade (in respect of goods acquired for trading) 575 493
575 493
2.10 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months - -Other debts Considered good 2,677 952Less : Provision for doubtful debts - -
2,677 9522.11 : Cash and bank balancesCash on hand - -Bank balances In current accounts 300 227
300 227
2.12 : Short term loans and advances(Unsecured)Considered goodAdvances to material suppliers 269 248Advance tax, net of provision for income taxes 7 6Prepaid expenses 93 98Other Advances 863 172
1,232 524
Promius Pharma LLC 640
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.13 : Other current assetsConsidered goodOther receivables from holding companyand other group companies 256 118
256 118
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.14 : Changes in inventory of stock-in-tradeOpeningStock-in-trade 493 188ClosingStock-in-trade 575 493
(82) (305)
2.15 : Employee benefits expenseSalaries, wages and bonus 5,373 4,202Contribution to provident and other funds 415 372Staff welfare expenses 509 309
6,297 4,883
2.16 : Finance costsInterest Expenses 32 -
32 -
2.17 : Other expenseLegal and professional 305 722Carriage outward 58 17Rates and taxes 124 49Other selling expenses 5,441 3,287Travelling and conveyance 376 276Communication 19 74Rent 237 282Insurance 44 45Provision - Advances & Debtors - 80Donations 5 5Printing and stationery 25 19Advertisements 324 41Miscellaneous 1,983 1,235
8,941 6,133
Promius Pharma LLC 641
2.18: Related Party Transactions:
The company has the following amount due to/from related parties :
Particulars As at As at31 March 2013 31 March 2012
i. Due from related parties(included in other current assets):Dr. Reddy’s Laboratories Limited 256 118
ii. Due to related parties(included in Other current liabilities):Dr. Reddy’s Laboratories Inc. 27,065 22,251Dr. Reddy’s Laboratories SA - 12
2.19: The tax expense for the Company is computed and presented together with the parentCompany's (Dr. Reddy's Laboratories Inc.) financial as per the tax laws of United States.
2.20: Commitments and contingent liabilities
There were no commitments or contingent liabilities as at 31 March 2013 (previous year Nil).
2.21: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.22: The Company incorporated in the United States of America, is a 100% subsidiary of Dr. Reddy’sLaboratories Inc.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G.V. PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (continued)(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Reddy Antilles N.V. 642
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012
Loss for the period after taxation (60,914) (30,465)Balance brought forward 143,907 174,372Balance carried forward to Balance Sheet 82,993 143,907
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place : Hyderabad Satish ReddyDate : 10 May 2013 Director
DIRECTORS’ REPORT
Reddy Antilles N.V. 643
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Reddy Antilles N.V., a companyincorporated and administered outside India, which comprise the Balance Sheet as at 31 March2013, and the Statement of Profit and Loss for the year ended, and a summary of significant accountingpolicies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act,1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the Loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Reddy Antilles N.V. 644
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Reddy Antilles N.V. 645
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 52,279 17,969Reserves and surplus 2.2 82,993 170,612
135,272 188,581Non current liabilitiesLong term borrowings 2.3 281,900 264,121
281,900 264,121Current liablitiesOher current liabilities 2.4 17,533 16,425Short term provisions 2.5 27 26
17,560 16,451
TOTAL 434,732 469,153
ASSETSNon current assetsNon current investments 2.6 364,394 371,024Long term loans and advances 2.7 65,498 58,302
429,892 429,326Current assetsCash and bank balances 2.8 2,272 79Short term loans and advances 2.9 2,568 39,748
4,840 39,827
TOTAL 434,732 469,153
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish ReddyPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Reddy Antilles N.V. 646
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeTotal revenue - -
ExpensesOther expenses 2.10 60,914 30,465
Total expenses 60,914 30,465
Profit / (Loss) before tax (60,914) (30,465)Tax expense Current tax - - Deferred tax - -
Profit / (Loss) for the year (60,914) (30,465)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish ReddyPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Reddy Antilles N.V. 647
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under Section 211(3C) of theCompanies Act, 1956, other pronouncements of Institute of Chartered Accountants of Indiaand provisions of the Companies Act, 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with Section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
Reddy Antilles N.V. 648
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
e) Investments
Investments that are readily realisable and intended to be held for not more than one year fromthe date of acquisition are classified as current investments. All other investments are classifiedas non current investments.
Non current investments are carried at cost less any other-than-temporary diminution in value,determined separately for each individual investment. The reduction in the carrying amount isreversed when there is a rise in the value of the investment or if the reasons for the reductionno longer exist. Any reduction in the carrying amount and any reversal in such reductions arecharged or credited to the statement of profit and loss.
Current investments are carried at the lower of cost and fair value. The comparison of cost andfair value is done separately in respect of each category of investment.
f) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Reddy Antilles N.V. 649
Notes to Financial Statements
Note 2 : Notes to Financial Statements
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised1,131,646 (previous year : 1,000,000) shares of USD 1 each 52,279 35,938
Issued1,131,646(previous year : 500,000) shares of USD 1 each 52,279 17,969
Subscribed and paid-up1,131,646 (previous year : 500,000) shares of USD 1 each 52,279 17,969
52,279 17,969
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 500,000 17,969 500,000 17,969Add: Share issued during the year 631,646 34,310 - -
Number of shares outstandingat the end of the year 1,131,646 52,279 500,000 17,969
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of USD 1 per share. Eachholder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars No. of Equity % equity No. of Equity % equity
shares held shares held shares held shares held
Dr. Reddy’s Laboratories Limited 1,131,646 100 500,000 100
Reddy Antilles N.V. 650
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplusSecurities premium reserveBalance at the beginning of the year 26,705 -Additions / (deductions) during the year (26,705) 26,705
- 26,705SurplusBalance at the beginning of the year 143,907 174,372Add: Current year loss (60,914) (30,465)
Balance carried forward 82,993 143,907
82,993 170,612
2.3 : Long term borrowingsUnsecuredBorrowings from holding company and other group companies 281,900 264,121
281,900 264,121
2.4 : Other current liabilitiesDue to holding company and other group companies 16,275 15,828Other current liabilities 1,258 597
17,533 16,425
2.5 : Short term provisionsIncome tax payable 27 26
27 26
2.6 : Non current investmentInvestment in subsidiaries 364,394 371,024Less: Provision for decline, other than temporary,in the value of non current investments - -
364,394 371,024
2.7 : Long term loans and advances(Unsecured)Considered goodLoan to holding company and other group companies 65,498 58,302
65,498 58,302
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Reddy Antilles N.V. 651
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2012 31 March 2011
2.8 : Cash and bank balancesCash on hand - -Bank balances In current accounts 2,272 79
2,272 79
2.9 : Short term loans and advances(Unsecured)Considered goodAdvances to material suppliers 822 771Prepaid expenses 60 61Other Advances 1,686 38,916
2,568 39,748
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.10 : Other expenseLegal and professional 1,171 905Non Executive Directors’ remuneration 65 30Foreign exchange loss, net 13,729 29,360Miscellaneous 45,949 170
60,914 30,465
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Reddy Antilles N.V. 652
2.11: Commitments and contingent liabilities
There were no commitments or contingent liabilities as at 31 March 2013 (previous year Nil).
2.12: Related Party Disclosures :
The company has the following amount due to/from related parties :
Particulars As at As at31 March 2013 31 March 2012
i. Due from related parties(included in long term loans and advances)Reddy Netherlands B.V 28,989 24,184OOO DRS LLC 34,440 34,118Eurobridge Consulting B.V. 2,069 -
ii. Due to related parties(included in borrowings and other liabilities):Dr. Reddy’s Laboratories Ltd. 298,175 279,949
2.13: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.14: The Company, incorporated in Antilles (Netherlands), is a 100% subsidiary of Dr. Reddy’sLaboratories Limited.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish ReddyPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Reddy beta GmbH 653
DIRECTORS’ REPORT
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012
Loss for the period after taxation - (108)Balance brought forward (47,299) (47,191)Balance carried forward to Balance Sheet (47,299) (47,299)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of profit of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of this Act for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Michael Ewers Abhijit MukherjeePlace : Hyderabad Director DirectorDate : 10 May 2013
Reddy beta GmbH 654
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Reddy beta GmbH a company incorporatedand administered outside India, which comprise the Balance Sheet as at 31 March 2013, and theStatement of Profit and Loss for the year ended, and a summary of significant accounting policies andother explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicable andrelevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carried outfor the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by management, as well as evaluating the overall presentation of thefinancial statements. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013; and
(b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Reddy beta GmbH 655
b. in our opinion proper books of account as required by law have been kept by the Company so faras appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreement withthe books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to the extentapplicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Reddy beta GmbH 656
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 1,350 1,350Reserves and surplus 2.2 387 (49)
1,737 1,301
Current liabilitiesTrade payables 2.3 82 -
82 -
TOTAL 1,819 1,301ASSETSCurrent assetsCash and bank balances 2.4 1,560 1,219Short term loans and advances 2.5 73 82Other current assets 2.6 186 -
1,819 1,301
TOTAL 1,819 1,301
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of Directors
Chartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Michael Ewers Abhijit MukherjeePartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Reddy beta GmbH 657
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeOther income 2.7 2 10
Total revenue 2 10
ExpensesOther expenses 2.8 2 118
Total expenses 2 118
Profit /(Loss) before tax - (108)Tax expense 2.10 Current tax - - Deferred tax - -
Profit /(Loss) for the year - (108)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of Directors
Chartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Michael Ewers Abhijit MukherjeePartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Reddy beta GmbH 658
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) of CompaniesAct 1956, other pronouncements of Institute of Chartered Accountants of India and provisions ofCompanies Act 1956.
The financial statements have been prepared based on books, records and other returns maintainedby the subsidiary. The financial statements have been presented in Indian Rupees, for thelimited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation of usefullife of tangible and intangible assets, assessment of recoverable amounts of deferred tax assets,provision for obligations relating to employees, provisions against litigations and impairment ofassets. Actual results could differ from these estimates. Estimates and underlying assumptionsare reviewed on an ongoing basis. Any revision to accounting estimates is recognised prospectivelyin the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability for atleast 12 months after the reporting date. Terms of a liability that could, at the option of thecounterparty, result in its settlement by the issue of equity instruments do not affect itsclassification.
Notes to Financial Statements
Reddy beta GmbH 659
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Provisions and contingencies
A provision is recognised when the Company has a present obligation as a result of past eventsand it is probable that an outflow of resources embodying economic benefits will be required tosettle the obligation. Provisions are recognised at the best estimate of the expenditure requiredto settle the present obligation at the balance sheet date. Provisions are measured on anundiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certain thatan inflow of economic benefits will arise, the asset and related income are recognised in theperiod in which the change occurs.
Notes to Financial Statements
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Reddy beta GmbH 660
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorisedEuro 25,000 (previous year 25,000)* 1,200 1,350
IssuedEuro 25,000 (previous year 25,000)* 1,350 1,350
Subscribed and paid-upEuro 25,000 (previous year 25,000)* 1,350 1,350
* No concept of nature and number of shares in this company
1,350 1,350
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Reddy beta GmbH 661
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year 47,250 (634)Additions / (deductions) during the year 436 47,884
47,686 47,250DeficitBalance at the beginning of the year (47,299) (47,191)Add: Current year loss - (108)
Balance carried forward (47,299) (47,299)
387 (49)
2.3 : Trade PayablesPayables to others 82 -
82 -
2.4 : Cash and bank balancesCash on hand - -Bank balances In current accounts 1,560 1,219
1,560 1,219
2.5 : Short term loans and advances(Unsecured)Considered goodAdvances to material suppliers 72 -Advance tax, net of provision for income taxes 1 -Other Advances - 82
73 82
2.6 : Other current assetsConsidered goodOther current assets 186 -
186 -
Reddy beta GmbH 662
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the year ended For the year endedParticulars 31 March 2013 31 March 2012
2.7 : Other incomeInterest income 2 10
2 10
2.8 : Other expenseLegal and professional - 4Rates and taxes - 11Insurance - 92Bank charges 2 11
2 118
2.9: Commitments and contingent liabilities
There were no commitments and contingent liabilities as at 31 March 2013 (previous year: Nil).
2.10: Tax expense for the Company is computed and presented together with the parent Company's(Reddy Holding GmbH) financial as per the tax laws of Germany.
2.11: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.12: The Company, incorporated in Germany, is a 100% subsidiary of Reddy Holding GmbH.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of Directors
Chartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Michael Ewers Abhijit MukherjeePartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Reddy Cheminor SA 663
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012
Loss for the period after taxation (1) (4)Balance brought forward (2,024) (2,020)Balance carried forward to Balance Sheet (2,025) (2,024)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We resolved to dissolve the entity and hence the accounts of the company are not prepared ongoing concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Satish ReddyPlace : Hyderabad DirectorDate : 10 May 2013
DIRECTORS’ REPORT
Reddy Cheminor SA 664
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Reddy Cheminor S.A., a companyincorporated and administered outside India, which comprise the Balance Sheet as at 31 March2013, and the Statement of Profit and Loss for the year ended, and a summary of significant accountingpolicies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act,1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the Loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Reddy Cheminor SA 665
b. In our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Reddy Cheminor SA 666
(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 1,958 1,958Reserves and surplus 2.2 (2,025) (2,024)
(67) (66)
Current liablitiesTrade payables 2.3 5,329 5,204
5,329 5,204
TOTAL 5,262 5,138
ASSETSCurrent assetsCash and bank balances 2.4 30 29Short term loans and advances 2.5 2,299 2,245Other current assets 2.6 2,933 2,864
5,262 5,138
TOTAL 5,262 5,138
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish ReddyPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Reddy Cheminor SA 667
(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
Income
Total revenue - -
ExpensesOther expenses 2.7 1 4
Total expenses 1 4
Profit / (Loss) before tax (1) (4)Tax expense Current tax - - Deferred tax - -
Profit / (Loss) for the year (1) (4)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish ReddyPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Reddy Cheminor SA 668
Note 1: Significant accounting policies(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
a) Basis of preparation of consolidated financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act 1956, other pronouncements of Institute of Chartered Accountants of India,provisions of Companies Act 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
The Board of Directors of the Company resolved to dissolve the entity and hence the accountsof the company are not prepared on going concern basis.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option of
Notes to Financial Statements
Reddy Cheminor SA 669
the counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the datesof the respective transactions. Exchange differences arising on foreign currency transactionssettled during the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
i) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
Notes to Financial Statements
Reddy Cheminor SA 670
(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capital
Authorised2,500 (previous year 2,500) shares of Euro 16 each 1,958 1,958
Issued2,500 (previous year 2,500) shares of Euro 16 each 1,958 1,958
Subscribed and paid-up2,500 (previous year 2,500) shares of Euro 16 each 1,958 1,958
1,958 1,958
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 2,500 1,958 2,500 1,958Add: Share issued during the year - - - -
Number of shares outstandingat the end of the year 2,500 1,958 2,500 1,958
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of Euro 16 per share.Each holder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars No. of Equity % equity No. of Equity % equity
shares held shares held shares held shares held
Dr. Reddy’s Laboratories Limited 2,500 100 2,500 100
Notes to Financial Statements
Note 2 : Notes to financial statements
Reddy Cheminor SA 671
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplus
DeficitBalance at the beginning of the year (2,024) (2,020)Add: Current year loss (1) (4)
Balance carried forward (2,025) (2,024)
2.3 : Trade PayablesPayables to others 5,329 5,204
5,329 5,204
2.4 : Cash and bank balancesCash on hand 30 29
30 29
2.5 : Short term loans and advances(Unsecured)Considered goodOther Advances 2,299 2,245
2,299 2,2452.6 : Other current assetsConsidered goodOther current assets 2,933 2,864
2,933 2,864
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.7 : Other expenseForeign exchange loss, net 1 4
1 4
Reddy Cheminor SA 672
2.8: Commitments and contingent liabilities
There are no commitments or contingent liabilities as at 31 March 2013 (previous year Nil).
2.9: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.10: The Company, incorporated in France, is a 100% subsidiary of Dr. Reddy’s Laboratories Limited.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish ReddyPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees thousands, except share data and where otherwise stated)
Reddy Holding GmbH 673
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012
Loss for the period after taxation (810) (504,119)Balance brought forward (7,390,257) (6,886,138)Balance carried forward to Balance Sheet (7,391,067) (7,390,257)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Michael Ewers G V PrasadPlace : Hyderabad Director DirectorDate : 10 May 2013
DIRECTORS’ REPORT
Reddy Holding GmbH 674
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Reddy Holding GmbH, a companyincorporated and administered outside India, which comprise the Balance Sheet as at 31 March2013, and the Statement of Profit and Loss for the year ended, and a summary of significant accountingpolicies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Reddy Holding GmbH 675
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Reddy Holding GmbH 676
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 1,350 1,350Reserves and surplus 2.2 (4,704,443) (1,633,712)
(4,703,093) (1,632,362)
Non current liabilitiesLong term borrowings 2.3 27,712,170 23,471,351Other long term liabilities 2.4 65 -
27,712,235 23,471,351Current liabilitiesShort term borrowings 2.3 3,128,383 3,054,959Other current liabilities 2.4 902,624 1,767,340Short term provisions 2.5 110,988 172,510
4,141,995 4,994,809
TOTAL 27,151,137 26,833,799ASSETSNon current assetsNon current investments 2.6 26,063,322 26,063,322Deferred tax assets, net 2.18 369,886 412,671Long term loans and advances 2.7 - 450
26,433,208 26,476,443Current assetsTrade receivables 2.8 - 24,610Cash and bank balances 2.9 3,683 45,706Short term loans and advances 2.10 426,739 150,183Other current assets 2.11 287,507 136,857
717,929 357,356
TOTAL 27,151,137 26,833,799
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.As per our report of even date attachedfor A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Michael Ewers G V PrasadPartner Director DirectorMembership No. 9750Place : HyderabadDate : 10 May 2013
Balance Sheet
Reddy Holding GmbH 677
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeOther operating revenues 245,407 -
Revenue from operations 245,407 -Other income 2.12 923,370 154,855
Total revenue 1,168,777 154,855
ExpensesConversion charges - 83Employee benefits expense 2.13 182,146 142,299Finance costs 2.14 852,175 483,852Other expenses 2.15 106,231 68,454
Total expenses 1,140,552 694,688
Profit / (Loss) before tax 28,225 (539,833)Tax expense 2.19 Current tax 29,035 (54,787) Deferred tax - 19,072
Profit / (Loss) for the year (810) (504,119)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Michael Ewers G V PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Reddy Holding GmbH 678
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under Section 211(3C) ofCompanies Act, 1956, other pronouncements of Institute of Chartered Accountants of Indiaand provisions of Companies Act, 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with Section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
d) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Notes to Financial Statements
Reddy Holding GmbH 679
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
e) Income-tax expenseIncome tax expense comprises current tax and deferred tax charge or credit, if any.
Current tax
The current charge for income taxes is calculated in accordance with the relevant tax regulationsapplicable to the Company.
Deferred tax
Deferred tax charge or credit reflects the tax effects of timing differences between accountingincome and taxable income for the period. The deferred tax charge or credit and thecorresponding deferred tax liabilities or assets are recognised using the tax rates that havebeen enacted or substantially enacted by the balance sheet date. Deferred tax assets arerecognised only to the extent there is reasonable certainty that the assets can be realised infuture; however, where there is unabsorbed depreciation or carry forward of losses, deferredtax assets are recognised only if there is a virtual certainty of realisations of such assets.Deferred tax assets are reviewed as at each balance sheet date and written-down or written-upto reflect the amount that is reasonably / virtually certain (as the case may be) to be realised.
Deferred tax assets and liabilities are offset where the Company has a legally enforceable rightto set-off assets against liabilities representing current tax, and where such assets and liabilitiesrelate to taxes on income levied by the same governing taxation laws.
f) Provisions and contingent liabilitiesA provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Notes to Financial Statements
Reddy Holding GmbH 680
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorisedEuro 25,000 (previous year 25,000)* 1,350 1,350
IssuedEuro 25,000 (previous year 25,000)* 1,350 1,350
Subscribed and paid-upEuro 25,000 (previous year 25,000)* 1,350 1,350
1,350 1,350
* No concept of nature and number of shares in this company
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year (198,161) 512,601Additions / (deductions) during the year (3,069,921) (710,762)
(3,268,082) (198,161)Securities premium reserveBalance at the beginning of the year 5,954,706 5,954,706Additions / (deductions) during the year - -
5,954,706 5,954,706DeficitBalance at the beginning of the year (7,390,257) (6,886,138)Add: Current year loss (810) (504,119)Balance carried forward (7,391,067) (7,390,257)
(4,704,443) (1,633,712)
Notes to Financial Statements
Note 2 : Notes to financial statements
Reddy Holding GmbH 681
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.3 : Borrowingsa) Long term borrowingsUnsecuredBorrowings from holding company and other group companies 27,712,170 23,471,351
27,712,170 23,471,351b) Short term borrowingsSecuredShort Term Loan - Banks 3,128,383 3,054,038Other short term loans - 921
3,128,383 3,054,959
2.4 : Other liabilitiesa) Other long term liabilitiesOther Liabilities - Non Current 65 -
65 -
b) Other current liabilitiesDue to holding company and other group companies - 97,208Accrued expenses 13,899 1,181,601Other current liabilities 888,725 488,531
902,624 1,767,340
2.5 : Short term provisionsIncome tax payable 110,988 172,510
110,988 172,510
2.6 : Non current investmentsInvestments in Subsidiaries 26,063,322 26,063,322Less: Provision for decline, other than temporary,in the value of long term investments - -
26,063,322 26,063,322
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Reddy Holding GmbH 682
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.7 : Long term loans and advances(Unsecured)Considered goodSecurity deposits - 450
- 450
2.8 : Trade Receivables(Unsecured)Other debts Considered good - 24,610
- 24,610Less: Provision for doubtful debts - -
- 24,610
2.9 : Cash and bank balancesCash on hand - -Bank balances In current accounts 3,683 45,706
3,683 45,706
2.10 : Short term loans and advances(Unsecured)Considered goodAdvances to material suppliers 425,697 -Staff loans and advances 1,042 136Prepaid expenses - 150,047
426,739 150,183
2.11 : Other current assetsConsidered goodOther current assets 287,507 136,857
287,507 136,857
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Reddy Holding GmbH 683
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.12 : Other incomeInterest income 20 -Profit on sale of fixed assets, net - 212Foreign exchange gain, net - 453Miscellaneous 923,350 154,190
923,370 154,855
2.13 : Employee benefits expenseSalaries, wages and bonus 158,527 121,087Contribution to provident and other funds 17,814 15,737Staff welfare expenses 5,805 5,475
182,146 142,299
2.14 : Finance costsInterest Expenses 852,175 483,852
852,175 483,852
2.15 : Other expenseLegal and professional 18,123 27,471Carriage outward - 894Rates and taxes 15,294 -Other selling expenses 1,047 -Travelling and conveyance 5,717 5,070Communication 13,071 12,281Rent 465 -Insurance 3,575 2,290Bad debts written-off 23,183 -Printing and stationery 1,164 1,264Bank charges 104 155Auditors' remuneration Audit fees 5,575 1,288Advertisements 620 2,079Miscellaneous 18,293 15,662
106,231 68,454
Reddy Holding GmbH 684
2.16: Commitments and contingent liabilities
There were no commitments and contingent liabilities as at 31 March 2013 (previous year: Nil)
2.17: Deferred taxation
Deferred tax asset, net included in the Balance Sheet comprises of the following:
As at As atParticulars 31 March 2013 31 March 2012
Deferred tax assets / (liabilities)Other Current assets 163,122 165,064Loss carry forward 270,339 312,156Trade receivables 47,949 46,827Current Liabilities 31,766 30,948Inventory (6,694) (3,747)Fixed assets (136,596) (138,577)
Deferred tax assets, net 369,886 412,671
2.18: Related party disclosures
The Company has following amounts due from/ to related parties:
As at As atParticulars 31 March 2013 31 March 2012
i. Due to related parties (included in Borrowings)Dr. Reddy’s Laboratories SA 1,316,198 961,833Lacock Holdings Limited 26,395,972 22,509,518
2.19: The total tax expense for the company is computed and presented jointly with its subsidiarycompanies as per the tax laws of Germany.
2.20: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.21: The Company, incorporated in Germany, is a 100% Subsidiary of Lacock Holdings Limited.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Michael Ewers G V PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Reddy Netherlands B.V. 685
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012
Loss for the period after taxation (180,162) (3,499)Balance brought forward (28,986) (25,487)Balance carried forward to Balance Sheet (209,148) (28,986)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Satish ReddyPlace : Hyderabad DirectorDate : 10 May 2013
DIRECTORS’ REPORT
Reddy Netherlands B.V. 686
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Reddy Netherlands B.V., a companyincorporated and administered outside India, which comprise the Balance Sheet as at 31 March2013, and the Statement of Profit and Loss for the year ended, and a summary of significant accountingpolicies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act,1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the Loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Reddy Netherlands B.V. 687
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Reddy Netherlands B.V. 688
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 6,626 6,626Reserves and surplus 2.2 2,245,340 (28,986)
2,251,966 (22,360)
Non current liabilitiesLong term borrowings 2.3 28,990 24,184
28,990 24,184Current liablitiesOther current liabilities 2.4 20,720 -
20,720 -
TOTAL 2,301,676 1,824
ASSETSNon Current assetsNon current investments 2.5 1,933,875 -Long term loans and advances 2.6 278,395 -
2,212,270 -Current assetsTrade receivables 2.7 1,202 1,556Cash and bank balances 2.8 24,433 268Short term loans and advances 2.9 63,771 -
89,406 1,824
TOTAL 2,301,676 1,824
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish ReddyPartner DirectorMembership No. 9750Place : HyderabadDate : 10 May 2013
Balance Sheet
Reddy Netherlands B.V. 689
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeOther income 2.10 421 290
Total revenue 421 290
ExpensesFinance costs 2.11 - 41Research and development 118,795 -Other expenses 2.12 61,788 3,748
Total expenses 180,583 3,789
Profit / (Loss) before tax (180,162) (3,499)Tax expense Current tax - - Deferred tax - -
Profit / (Loss) for the year (180,162) (3,499)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish ReddyPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Reddy Netherlands B.V. 690
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act, 1956, other pronouncements of Institute of Chartered Accountants of Indiaand provisions of Companies Act, 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
d) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Notes to Financial Statements
Reddy Netherlands B.V. 691
Liabilities:A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
e) Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
f) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
g) Research and development
Expenditures on research activities undertaken with the prospect of gaining new scientific ortechnical knowledge and understanding are recognized in the statement of profit and losswhen incurred.
Development activities involve a plan or design for the production of new or substantially improvedproducts and processes. Development expenditures are capitalized only if:
l Development costs can be measured reliably,
l The product or process is technically and commercially feasible,
l Future economic benefits are probable and ascertainable, and
l The Company intends to and has sufficient resources to complete development and hasthe ability to use or sell the asset.
Expenditure incurred on fixed assets used for research and development is capitalisedand depreciated in accordance with the depreciation policy of the Company.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Notes to Financial Statements
Reddy Netherlands B.V. 692
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised3,200 (previous year 3,200) shares of Euro 50 each 6,626 6,626
Issued3,200 (previous year 3,200) shares of Euro 50 each 6,626 6,626
Subscribed and paid-up3,200 (previous year 3,200) shares of Euro 50 each 6,626 6,626
6,626 6,626
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 3,200 6,626 704 1,820Add: Share issued during the year - - 2,496 4,806
Number of shares outstandingat the end of the year 3,200 6,626 3,200 6,626
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of Euro 50 per share.Each holder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars No. of Equity % equity No. of Equity % equity
shares held shares held shares held shares held
Dr. Reddy’s Laboratories SA 3,200 100 - -Reddy Antilles N.V. - - 3,200 100
Notes to Financial Statements
Note 2 : Notes to financial statements
Reddy Netherlands B.V. 693
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplusSecurities premium reserveBalance at the beginning of the year - -Additions / (deductions) during the year 2,454,488 -
2,454,488 -DeficitBalance at the beginning of the year (28,986) (25,487)Add: Current year loss (180,162) (3,499)Balance carried forward (209,148) (28,986)
2,245,340 (28,986)
2.3 : Long term borrowingsUnsecuredBorrowings from holding company and other group companies 28,990 24,184
28,990 24,184
2.4 : Other current liabilitiesAccrued expenses 16,910 -Other current liabilities 3,810 -
20,720 -
2.5 : Non current investmentsInvestments in Subsidiaries 1,933,875 -Less: Provision for decline and other than temporary,in the value of long term investments - -
1,933,875 -
2.6 : Long term loans and advances(Unsecured)Considered goodLoan to holding company and other group companies 278,395 -
278,395 -
Reddy Netherlands B.V. 694
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.7 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months - -Other debts Considered good 1,202 1,556
1,202 1,556Less: Provision for doubtful debts - -
1,202 1,556
2.8 : Cash and bank balancesCash on hand - -Bank balances In current accounts 24,433 268
24,433 268
2.9 : Short term loans and advances(Unsecured)Considered goodTrade advance to holding company and other group companies 32,075 -Balance with statutory agencies 24,639 -Other advances 7,057 -
63,771 -
Reddy Netherlands B.V. 695
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.10 : Other incomeInterest income 421 -Foreign exchange gain, net - 290
421 290
2.11 : Finance costsInterest Expenses - 41
- 41
2.12 : Other expenseLegal and professional 15,981 -Foreign exchange loss, net 38,147 -Bank charges 40 51Miscellaneous 7,620 3,697
61,788 3,748
Reddy Netherlands B.V. 696
2.13: Commitments and contingent liabilities
There are no commitments and contingent liabilities as on 31 March 2013 (previous year Nil).
2.14: Related party Disclosures:
The company has the following amount due to/from related parties :
As at As atParticulars 31 March 2013 31 March 2013
i. Due to related parties(included in long term borrowings)Reddy Antilles N.V 28,990 24,184
ii. Due from related parties(included in loans and advances)Octoplus N.V. 310,470 -
2.15: On 15 February 2013, the Company invested an amount of ̀ 1,771,763 to acquire 93.1% of theoutstanding equity shares of OctoPlus N.V.
2.16: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.17: The Company, incorporated in the Netherlands, is a 100% Subsidiary of Dr. Reddy’s LaboratoriesSA.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish ReddyPartner DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Reddy Pharma Iberia SA 697
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012
Profit for the period after taxation 9,097 74,424Balance brought forward (554,794) (629,219)Balance carried forward to Balance Sheet (545,697) (554,794)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of profit of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Sameer Natu M. V. NarasimhamPlace : Hyderabad Director DirectorDate : 10 May 2013
DIRECTORS’ REPORT
Reddy Pharma Iberia SA 698
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Reddy Pharma Iberia SA, a companyincorporated and administered outside India, which comprise the Balance Sheet as at 31 March2013, and the Statement of Profit and Loss for the year ended, and a summary of significant accountingpolicies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the profit for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Reddy Pharma Iberia SA 699
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Reddy Pharma Iberia SA 700
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 321,090 321,090Reserves and surplus 2.2 (544,401) (546,310)
(223,311) (225,220)
Share application money pending allotment 244,928 -
Non current liabilitiesLong term borrowings 2.3 41 373,311Other long term liabilities 2.4 1,853 3,167
1,894 376,478Current liabilitiesTrade payables 2.5 3,518 20,920Other current liabilities 2.4 8,434 17,020
11,952 37,940
TOTAL 35,463 189,198ASSETSCurrent assetsTrade receivables 2.6 - 71,127Cash and bank balances 2.7 30,982 114,187Short term loans and advances 2.8 4,481 3,884
35,463 189,198
TOTAL 35,463 189,198
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Sameer Natu M. V. NarasimhamPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Reddy Pharma Iberia SA 701
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeSales, net 70,766 172,920License fees 1,412 19,842
Revenue from operations 72,178 192,763Other income 2.9 275 22
Total revenue 72,453 192,785
ExpensesCost of material consumed(including packing material consumed) 28,468 66,402Employee benefits expense 2.10 4,838 4,492Finance costs 2.11 9,617 6,487Other expenses 2.12 20,433 40,980
Total expenses 63,356 118,361
Profit before tax 9,097 74,424Tax expense Current tax - - Deferred tax - -
Profit for the year 9,097 74,424
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Sameer Natu M. V. NarasimhamPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Reddy Pharma Iberia SA 702
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statementsThe financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act 1956, other pronouncements of Institute of Chartered Accountants of India,provisions of Companies Act 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
Notes to Financial Statements
Reddy Pharma Iberia SA 703
d) Retirement benefits
Contributions payable to employees, pension and social security schemes, which are definedcontribution schemes, are charged to the statement of profit and loss.
e) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
f) Revenue recognition
Sale of goods
Revenue is recognized when the significant risks and rewards of ownership have been transferredto the buyer, recovery of the consideration is probable, the associated costs and possiblereturn of goods can be estimated reliably, there is no continuing management involvement withthe goods and the amount of revenue can be measured reliably. Revenue from the sale ofgoods is measured at the fair value of the consideration received or receivable, net of returns,sales tax and applicable trade discounts and allowances. Revenue includes shipping andhandling costs billed to the customer.
License fee
The Company enters into certain dossier sales, licensing and supply arrangements with variousparties. Some of these arrangements include certain performance obligations by the Company.Revenue from such arrangements is recognized in the period in which the Company completesall its performance obligations.
Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
g) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Note 1: Significant accounting policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Notes to Financial Statements
Reddy Pharma Iberia SA 704
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised5,566,000 (previous year 5,566,000) shares of Euro 1 each 321,090 321,090
Issued5,566,000 (previous year 5,566,000) shares of Euro 1 each 321,090 321,090
Subscribed and paid-up5,566,000 (previous year 5,566,000) shares of Euro 1 each 321,090 321,090
321,090 321,090
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 5,566,000 321,090 5,566,000 321,090Add: Share issued during the year - - - -
Number of shares outstandingat the end of the year 5,566,000 321,090 5,566,000 321,090
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of Euro 1 per share. Eachholder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars No. of Equity % equity No. of Equity % equity
shares held shares held shares held shares held
Dr. Reddy’s Laboratories Limited 5,566,000 100 5,566,000 100
Notes to Financial Statements
Note 2 : Notes to financial statements
Reddy Pharma Iberia SA 705
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year 8,443 27,206Additions / (deductions) during the year (7,188) (18,763)
1,255 8,443Securities premium reserveBalance at the beginning of the year 41 41Additions / (deductions) during the year - -
41 41DeficitBalance at the beginning of the year (554,794) (629,219)Add: Current year profit 9,097 74,424Balance carried forward (545,697) (554,794)
(544,401) (546,310)
2.3 : Long term borrowingsUnsecuredBorrowings from holding company and other group companies 41 373,311
41 373,311
2.4 : Other liabilitiesa) Other long term liabilities
Deferred revenue - non current 1,853 3,167
1,853 3,167b) Other current liabilities
Accrued expenses 6,772 15,026Due to statutory authorities 272 679Other current liabilities 1,390 1,315
8,434 17,020
2.5 : Trade PayablesPayables to holding company and other group companies - 19,579Payables to others 3,518 1,341
3,518 20,920
Reddy Pharma Iberia SA 706
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.6 : Trade Receivables(Unsecured)Debts outstanding for a period exceeding six months Considered doubtful 4 -Other debts Considered good - 71,127
4 71,127Less: Provision for doubtful debts (4) -
- 71,127
2.7 : Cash and bank balancesCash on hand - -Bank balances In current accounts 30,982 114,187
30,982 114,187
2.8 : Short term loans and advances(Unsecured)Considered goodOther Advances 4,481 3,884
4,481 3,884
Reddy Pharma Iberia SA 707
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Lakhs, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.9 : Other incomeInterest income 275 18Foreign exchange gain, net - 4
275 22
2.10 : Employee benefits expenseSalaries, wages and bonus 4,838 4,492
4,838 4,492
2.11 : Finance costsInterest Expenses 9,617 6,487
9,617 6,487
2.12 : Other expenseLegal and professional 8,425 7,393Rates and taxes - 10Other selling expenses 9,043 30,752Travelling and conveyance 391 647Communication 190 177Rent 909 837Insurance 18 17Bank charges 435 169Miscellaneous 1,022 978
20,433 40,980
Reddy Pharma Iberia SA 708
2.13: Commitments and contingent liabilities
There were no commitments or contingent liabilities as on 31 March 2013 (previous year: Nil).
2.14: Related Party Disclosures:
The company has the following amount due to/from related parties :
As at As atParticulars 31 March 2013 31 March 2012
i. Due to related parties(included in long term borrowings):Dr. Reddys Laboratories SA - 373,271Dr. Reddy’s Laboratories (UK) Limited 41 40
ii. Due to related parties (included in Trade Payables ):Dr.Reddy’s Laboratories Limited - 19,579
2.15: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.16. The Company, incorporated in Iberia, Spain is a 100% subsidiary of Dr. Reddy’s LaboratoriesLimited.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Sameer Natu M. V. NarasimhamPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Reddy Pharma Italia S.p.A 709
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012
Loss for the period after taxation (13,815) (11,161)Balance brought forward (93,867) (82,705)Balance carried forward to Balance Sheet (107,682) (93,867)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. We have prepared the Annual Accounts on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Place : Hyderabad Sameer Natu Satish ReddyDate : 10 May 2013 Director Director
DIRECTORS’ REPORT
Reddy Pharma Italia S.p.A 710
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Reddy Pharma Italia S.p.A., a companyincorporated and administered outside India, which comprise the Balance Sheet as at 31 March2013, and the Statement of Profit and Loss for the year ended, and a summary of significant accountingpolicies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Reddy Pharma Italia S.p.A 711
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A.Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A.Ramachandra RaoPlace : Hyderabad PartnerDate : 10 May 2013 Membership No: 9750
Reddy Pharma Italia S.p.A 712
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 62,794 62,794Reserves and surplus 2.2 (113,207) (94,077)
(50,413) (31,283)
Non current liabilitiesLong term borrowings 2.3 1,090,724 997,313Other long term liabilities 2.4 - 10,881
1,090,724 1,008,194Current liabilitiesTrade payables 2.5 2,919 11,002Other current liabilities 2.4 11,291 18,833Short term provisions 2.6 427 1,357
14,637 31,192
TOTAL 1,054,948 1,008,103ASSETSNon current assetsFixed assets Tangible assets 2.7 521 270Non current investments 2.8 172,878 172,878Long term loans and advances 2.9 812,405 749,088
985,804 922,236Current assetsCash and bank balances 2.10 393 3,082Short term loans and advances 2.11 2,376 1,195Other current assets 2.12 66,375 81,590
69,144 85,867
TOTAL 1,054,948 1,008,103Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Sameer Natu Satish ReddyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Reddy Pharma Italia S.p.A 713
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeLicense fees 1,421 4,365Other operating revenues 28,338 24,339
Total revenue 29,759 28,704
ExpensesEmployee benefits expense 2.13 27,116 23,981Depreciation and amortization expense 2.7 352 298Other expenses 2.14 16,106 15,586
Total expenses 43,574 39,865
Profit/ (Loss) before tax (13,815) (11,161)Tax expense Current tax - - Deferred tax - -
Profit/ (Loss) for the year (13,815) (11,161)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Sameer Natu Satish ReddyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Reddy Pharma Italia S.p.A 714
Note 1: Significant Accounting Policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under Section 211(3C) of theCompanies Act, 1956, other pronouncements of Institute of Chartered Accountants of Indiaand provisions of the Companies Act, 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with the Section 212 of the Companies Act, 1956.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Notes to Financial Statements
Reddy Pharma Italia S.p.A 715
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
d) Tangible assets and depreciation
Tangible fixed assets are stated at the cost of acquisition less accumulated depreciation. Thecost of tangible fixed assets includes taxes, duties, freight and other incidental expenses relatedto the acquisition and installation of the respective assets.
Subsequent expenditure related to an item of tangible fixed asset is capitalised only if it increasesthe future benefits from the existing assets beyond its previously assessed standards ofperformance.
Advances paid towards acquisition of tangible fixed assets outstanding at each balance sheetdate are shown under long-term loans and advances. Cost of assets not ready for intendeduse, as on the balance sheet date, is shown as capital work-in-progress.
Depreciation on tangible fixed assets is provided using the straight-line method based on theuseful life of the assets as estimated by Management. Depreciation is calculated on a pro-ratabasis from the date of installation till the date the assets are sold or disposed off. Individualassets costing less than ` 5,000/- are depreciated in full in the year of acquisition.
Leasehold land is depreciated over the period of the lease.
Management’s estimates of the useful lives for various categories of tangible fixed assets aregiven below:
YearsFurniture, fixtures and office equipment(other than computer equipment) 3 to 5
e) Investments
Investments that are readily realisable and intended to be held for not more than one year fromthe date of acquisition are classified as current investments. All other investments are classifiedas non-current investments.
Non-current investments are carried at cost less any other-than-temporary diminution in value,determined separately for each individual investment. The reduction in the carrying amount isreversed when there is a rise in the value of the investment or if the reasons for the reductionno longer exist. Any reduction in the carrying amount and any reversal in such reductions arecharged or credited to the statement of profit and loss.
Current investments are carried at the lower of cost and fair value. The comparison of cost andfair value is done separately in respect of each category of investment.
f) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Notes to Financial Statements
Note 1: Significant Accounting Policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Reddy Pharma Italia S.p.A 716
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
g) Provisions and contingencies
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Notes to Financial Statements
Note 1: Significant Accounting Policies (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Reddy Pharma Italia S.p.A 717
Notes to Financial Statements
Note 2 : Notes to financial statements (continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised120,000 (previous year 120,000) Equity share of 1 Euro each 62,794 62,794
Issued120,000 (previous year 120,000) Equity share of 1 Euro each 62,794 62,794
Subscribed and paid-up120,000 (previous year 120,000) Equity share of 1 Euro each 62,794 62,794
62,794 62,794
(a) Reconciliation of the shares outstanding at the beginning and at the end of reportingperiod
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
equity shares equity shares
Number of sharesat the beginning of the year 120,000 62,794 120,000 62,794Add: Share issued during the year - - - -
Number of sharesoutstanding at the end of the year 120,000 62,794 120,000 62,794
(b) Terms/rights attached to shares
The company has only one class of equity shares having a par value of Euro 1 per share. Eachholder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012
Particulars No. of % of No. of % ofequity equity equity equityshares shares held shares shares held
Lacock Holdings Limited 120,000 100 120,000 100
Reddy Pharma Italia S.p.A 718
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year (210) 12,398Additions / (deductions) during the year (5,315) (12,608)
(5,525) (210)DeficitBalance at the beginning of the year (93,867) (82,705)Add: Current year loss (13,815) (11,161)
Balance carried forward (107,682) (93,867)
(113,207) (94,077)
2.3 : Long term borrowingsBorrowings from holding company and other group companies 1,090,724 997,313
1,090,724 997,313
2.4 : Other liabilitiesa) Other long term liabilities
Deferred revenue - non current - 10,881
- 10,881
b) Other current liabilitiesAccrued expenses 6,908 12,320Due to statutory authorities 202 -Other current liabilities 4,181 6,513
11,291 18,833
2.5 : Trade PayablesPayables to holding company and other group companies - 11,002Payables to others 2,919 -
2,919 11,002
2.6 : Short term provisionsIncome tax payable 427 1,357
427 1,357
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Reddy P
harma Italia S
.p.A719
Notes to F
inancial Statem
ents
Note 2 : Notes to financial statements (continued)
2.7 : Fixed assets (All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Gross Block Depreciation Net Block
Description As at Additions Deletions Forex As at As at For the Deletions Forex As at As at As at
01.04.2012 31.03.2013 01.04.2012 year 31.03.2013 31.03.2013 31.03.2012
Land - Leasehold 1,528 - - 48 1,576 1,258 283 - 14 1,555 21 270
Furniture and 307 530 - 41 878 307 69 - 2 378 500 -Fixtures
TOTAL 1,835 530 - 89 2,454 1,565 352 - 16 1,933 521 270
Previous year 2,173 - 338 - 1,835 1,267 298 - - 1,565 270
Reddy Pharma Italia S.p.A 720
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars As at As at31 March 2013 31 March 2012
2.8 : Non current investmentsInvestments in Subsidiaries 172,878 172,878Less: Provision for decline, other than temporary,in the value of long term investments - -
172,878 172,878
2.9 : Long term loans and advances(Unsecured)Considered goodLoan to holding company and other group companies 811,702 748,579Security Deposits 703 509
812,405 749,088
2.10 : Cash and bank balancesCash on hand 9 15Bank balances In current accounts 384 3,067
393 3,0822.11 : Short term loans and advances(Unsecured)Considered goodBalances with Statutory Agencies 1,568 377Prepaid expenses 527 818Other Advances 281 -
2,376 1,195
2.12 : Other current assetsConsidered goodOther receivables from holding company andother group companies 65,916 81,098Other current assets 459 492
66,375 81,590
Notes to Financial Statements
Note 2 : Notes to financial statements (continued)
Reddy Pharma Italia S.p.A 721
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.13 : Employee benefits expenseSalaries, wages and bonus 27,116 23,981
27,116 23,981
2.14 : Other expenseLegal and professional 3,581 3,914Other selling expenses 2 1,352Travelling and conveyance 3,076 139Communication 291 239Rent 6,104 6,538Printing and stationery 1,462 1,032Bank charges 104 219Auditors’ remuneration Audit fees 728 685Miscellaneous 758 1,469
16,106 15,586
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Reddy Pharma Italia S.p.A 722
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
2.15. Commitments and contingent liabilities
There were no commitments and contingent liabilities as at 31 March 2013 (Previous Year –NIL).
2.16. Related party disclosures
The Company has following amounts due from/ to related parties:
Particulars As at As at31 March 2013 31 March 2012
i. Due to related parties(included in long term borrowings):Lacock Holdings Limited 1,090,724 997,313
ii. Due from related parties(included in long term loans and advances):Dr. Reddy’s Srl 811,702 748,579
iii. Due to related parties(included in Trade payables):Dr. Reddy’s Srl - 11,002
iv. Due from related parties(included in Other Current Assets):Dr. Reddy’s Srl 65,916 81,098
2.17: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.18: The Company, incorporated in Italy, is a 100% subsidiary of Lacock Holdings Limited.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Sameer Natu Satish ReddyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Reddy Pharmaceuticals Hong Kong Ltd. 723
Dear Members,
Your Directors present this report of the Company for the period from 1 April 2012 to 19 October2012. The Company was dissolved on 19 October 2012.
Financial Highlights
The following table gives the financial highlights of the Company for the period from 1 April 2012 to 19October 2012 as compared to previous financial year:
(` in Thousands)
Particulars 01 April 2012 - 01 April 2011 -19 October 2012 31 March 2012
Loss for the period after taxation (6,084) (1,544)Balance brought forward (51,937) (50,393)Deficiency transferred to Share Capital 58,021 -Balance carried forward to Balance Sheet - (51,937)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company for the period ended 19 October 2012 and of loss of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the period.
for and on behalf of the Board of Directors
Satish Reddy G.V. PrasadPlace : Hyderabad Director DirectorDate : 19 October 2012
DIRECTORS’ REPORT
Reddy Pharmaceuticals Hong Kong Ltd. 724
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Reddy Pharmaceuticals Hong KongLimited, a company incorporated and administered outside India, which comprise the Balance Sheetas at 19 October 2012, and the Statement of Profit and Loss for the period from 1 April 2012 to 19October 2012, and a summary of significant accounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 19 October 2012;and
(b) in the case of the Statement of Profit and Loss, of the loss for the period from 1 April 2012 to 19October 2012; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Reddy Pharmaceuticals Hong Kong Ltd. 725
b. in our opinion proper books of account as required by law have been kept by the Company sofar as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 19 October 2012
Reddy Pharmaceuticals Hong Kong Ltd. 726
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 19 October 2012 31 March 2011
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 - 58,021Reserves and surplus 2.2 - (51,921)
- 6,100
Current liabilitiesTrade payables 2.3 - 2,472
- 2,472
TOTAL - 8,572ASSETSNon current assetsLong term loans and advances 2.4 - 4,118
- 4,118Current assetsShort term loans and advances 2.5 - 3,574Other current assets 2.6 - 880
- 4,454
TOTAL - 8,572
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G.V. PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 19 October 2012
Balance Sheet
Reddy Pharmaceuticals Hong Kong Ltd. 727
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the period For the periodParticulars Note 1 April 2012 - 1 April 2011-
19 October 2012 31 March 2012
IncomeOther income 2.7 2,659 -
Total revenue 2,659 -
ExpensesOther expenses 2.8 8,743 1,544
Total expenses 8,743 1,544
Profit / (Loss) before tax (6,084) (1,544)Tax expense - -
Profit / (Loss) for the period (6,084) (1,544)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G.V. PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 19 October 2012
Statement of Profit and Loss
Reddy Pharmaceuticals Hong Kong Ltd. 728
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act, 1956, other pronouncements of Institute of Chartered Accountants of India,provisions of Companies Act, 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
The Company was dissolved on 19 October 2012.
b) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the statement of profit and loss.
Notes to Financial Statements
Reddy Pharmaceuticals Hong Kong Ltd. 729
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 19 October 2012 31 March 2012
2.1 : Share capitalAuthorisedNil (previous year 12,000,000) shares of HK$ 1 each - 59,893
IssuedNil (previous year 11,625,000) shares of HK$ 1 each - 58,021
Subscribed and paid-up11,625,000 shares of HK$ 1 each 58,021 58,021Less : Balance in surplus accounttransferred to Share capital on dissolution (58,021) -
Nil (previous year 11,625,000) shares of HK$ 1 each - 58,021
(a) Reconciliation of the equity shares outstanding is set out below:
As at 19 October 2012 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 11,625,000 58,021 11,625,000 58,021Less : On dissolution of the entity (11,625,000) (58,021) - -
Number of shares outstandingat the end of the period - - 11,625,000 58,021
(b) Details of shareholders holding more than 5% shares in the company
As at 19 October 2012 As at 31 March 2012Particulars No. of Equity % equity No. of Equity % equity
shares held shares held shares held shares held
Dr. Reddy’s Laboratories Limited - - 11,625,000 100
Notes to Financial Statements
Note 2 : Notes to financial statements
Reddy Pharmaceuticals Hong Kong Ltd. 730
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 19 October 2012 31 March 2012
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year 16 16Additions / (deductions) during the year - -Less: Transferred to statement of profit and losson disposal of investments (16) -
- 16DeficitBalance at the beginning of the year (51,937) (50,393)Add: Current period loss (6,084) (1,544)Less: Transferred to Share capital on dissolution 58,021 -
- (51,937)
- (51,921)
2.3 : Trade PayablesPayables to others - 2,472
- 2,472
2.4 : Long term loans and advances(Unsecured)Considered goodLoan to holding company and other group companies - 4,118
- 4,118
2.5 : Short term loans and advances(Unsecured)Considered goodOther Advances - 3,574
- 3,574
2.6 : Other current assetsConsidered goodOther receivables from holding companyand other group companies - 880
- 880
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
Reddy Pharmaceuticals Hong Kong Ltd. 731
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the period For the periodParticulars 1 April 2012 - 1 April 2011 -
19 October 2012 31 March 2012
2.7 : Other incomeOther Income 2,643 -Transfer of exchange differences accumulatedin foreign currency translation reserveon disposal of investments 16 -
2,659 -
2.8 : Other expenseForeign exchange loss, net 7,818 25Miscellaneous 925 1,519
8,743 1,544
2.9: Related party disclosures
The Company has the following amounts due from/to related parties:
As at As atParticulars 19 October 2012 31 March 2012
Due from related parties(Included in Long term loans and advancesand other current assets)Dr. Reddy’s Laboratories Limited - 4,998
2.10: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.11: The entity was dissolved during the year on 19 October 2012.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G.V. PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 19 October 2012
Reddy US Therapeutics Inc 732
Dear Members,
Your Directors present the Annual Report of the Company for the year ended 31 March 2013.
Financial Highlights
The following table gives the financial highlights of the Company for the financial year 2012-13 ascompared to previous financial year:
(` in Thousands)
Particulars 31 March 2013 31 March 2012
Profit/ (Loss) for the period after taxation (22,237) 10,669Balance brought forward (73,775) (84,445)Balance carried forward to Balance Sheet (96,012) (73,775)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company at the end of the financial year 2012-13 and of loss of the Company forthat period;
3. We have taken proper and sufficient care for the maintenance of adequate accounting recordsin accordance with the provisions of this Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities;
4. On 28 September 2012, we resolved to dissolve the entity and hence the accounts of thecompany are not prepared on going concern basis.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the year.
for and on behalf of the Board of Directors
Satish Reddy G V PrasadPlace : Hyderabad Director DirectorDate : 10 May 2013
DIRECTORS’ REPORT
Reddy US Therapeutics Inc 733
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Reddy US Therapeutics Inc., a companyincorporated and administered outside India, which comprise the Balance Sheet as at 31 March2013, and the Statement of Profit and Loss for the year ended, and a summary of significant accountingpolicies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act,1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicableand relevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carriedout for the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosuresin the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures thatare appropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 March 2013;and
(b) in the case of the Statement of Profit and Loss, of the Loss for the year ended on that date; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
b. in our opinion proper books of account as required by law have been kept by the Company so
Reddy US Therapeutics Inc 734
far as appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreementwith the books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to theextent applicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 10 May 2013
Reddy US Therapeutics Inc 735
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note 31 March 2013 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 93,652 93,652Reserves and surplus 2.2 (91,816) (70,940)
1,836 22,712
Non current liabilitiesOther long term liabilities 2.3 - 254
- 254Current liablitiesOther current liabilities 2.3 - 4,113
- 4,113
TOTAL 1,836 27,079
ASSETSNon current assetsLong term loans and advances 2.4 - 119
- 119
Current assetsTrade receivables 2.5 - 24,788Cash and bank balances 2.6 1,836 2,172
1,836 26,960
TOTAL 1,836 27,079
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G V PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Balance Sheet
Reddy US Therapeutics Inc 736
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the For theParticulars Note year ended year ended
31 March 2013 31 March 2012
IncomeService income - 5Other operating revenues - 14,123
Revenue from operations - 14,128
Other income 2.7 - 100
Total revenue - 14,228
ExpensesOther expenses 2.8 22,237 3,559
Total expenses 22,237 3,559
Profit/ (Loss) before tax (22,237) 10,669Tax expense - -
Profit / (Loss) for the year (22,237) 10,669
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G V PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Statement of Profit and Loss
Reddy US Therapeutics Inc 737
Note 1: Significant accounting policies
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) ofCompanies Act, 1956, other pronouncements of Institute of Chartered Accountants of Indiaand provisions of Companies Act, 1956.
The financial statements have been prepared based on books, records and other returnsmaintained by the subsidiary. The financial statements have been presented in Indian Rupees,for the limited purpose of complying with section 212 of the Companies Act, 1956.
On 28 September 2012, the Board of Directors of the Company resolved to dissolve the entityand hence the accounts of the company are not prepared on going concern basis.
b) Use of estimates
The preparation of the financial statements in conformity with GAAP requires management tomake estimates and assumptions that affect the reported amounts of assets and liabilities anddisclosure of contingent liabilities on the date of the financial statements and reported amountsof revenues and expenses for the year. Examples of such estimates include estimation ofuseful life of tangible and intangible assets, assessment of recoverable amounts of deferredtax assets, provision for obligations relating to employees, provisions against litigations andimpairment of assets. Actual results could differ from these estimates. Estimates and underlyingassumptions are reviewed on an ongoing basis. Any revision to accounting estimates isrecognised prospectively in the current and future periods.
c) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the datesof the respective transactions. Exchange differences arising on foreign currency transactionssettled during the year are recognised in the statement of profit and loss.
Monetary assets and liabilities denominated in foreign currencies as at the balance sheet dateare translated using the foreign exchange rates as at the balance sheet date. The resultantexchange differences are recognised in the statement of profit and loss. Non-monetary assetsand liabilities are carried at the rates prevailing on the date of transaction.
d) Current and non current classification
All the assets and liabilities have been classified as current or non current as per the Company’snormal operating cycle and other criteria set out in the Revised Schedule VI to the CompaniesAct, 1956.
Assets:
An asset is classified as current when it satisfies any of the following criteria:
a) it is expected to be realised in, or is intended for sale or consumption in, the Company’snormal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is expected to be realised within 12 months after the reporting date; or
Notes to Financial Statements
Reddy US Therapeutics Inc 738
d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settlea liability for at least 12 months after the reporting date.
Liabilities:
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Company’s normal operating cycle;
b) it is held primarily for the purpose of being traded;
c) it is due to be settled within 12 months after the reporting date; or
d) the Company does not have an unconditional right to defer settlement of the liability forat least 12 months after the reporting date. Terms of a liability that could, at the option ofthe counterparty, result in its settlement by the issue of equity instruments do not affectits classification.
Current assets/ liabilities include the current portion of non current financial assets/ liabilitiesrespectively. All other assets/ liabilities are classified as non current.
e) Revenue recognition
Interest income
Income from interest on deposits, loans and interest bearing securities is recognised on thetime proportionate method.
f) Provisions and contingent liabilities
A provision is recognised when the Company has a present obligation as a result of pastevents and it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation. Provisions are recognised at the best estimate of the expenditurerequired to settle the present obligation at the balance sheet date. Provisions are measured onan undiscounted basis.
A disclosure for a contingent liability is made when there is a possible obligation or a presentobligation that may, but probably will not, require an outflow of resources. Where there is possibleobligation or a present obligation in respect of which the likelihood of outflow of resources isremote, no provision or disclosure is made. Contingent assets are not recognised in the financialstatements. However, contingent assets are assessed continually and if it is virtually certainthat an inflow of economic benefits will arise, the asset and related income are recognised inthe period in which the change occurs.
Note 1: Significant accounting policies (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Notes to Financial Statements
Reddy US Therapeutics Inc 739
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.1 : Share capitalAuthorised10,000,000 (previous year 10,000,000) shares of USD 0.0001 each 95,646 95,646
Issued9,791,500 (previous year 9,791,500) shares of USD 0.0001 each 93,652 93,652
Subscribed and paid-up9,791,500 (previous year 9,791,500) shares of USD 0.0001 each 93,652 93,652
93,652 93,652
(a) Reconciliation of the equity shares outstanding is set out below:
As at 31 March 2013 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 9,791,500 93,652 9,791,500 93,652Add: Share issued during the year - - - -
Number of shares outstandingat the end of the year 9,791,500 93,652 9,791,500 93,652
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of U.S.$ 0.0001 pershare. Each holder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 31 March 2013 As at 31 March 2012Particulars No. of Equity % equity No. of Equity % equity
shares held shares held shares held shares held
Reddy Antilles N. V 9,791,500 100 9,791,500 100
Notes to Financial Statements
Note 2 : Notes to financial statements
Reddy US Therapeutics Inc 740
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.2 : Reserves and surplusForeign currency translation reserveBalance at the beginning of the year 2,835 259Additions / (deductions) during the year 1,361 2,576
4,196 2,835DeficitBalance at the beginning of the year (73,775) (84,445)Add: Current year profit / (loss) (22,237) 10,669
Balance carried forward (96,012) (73,775)
(91,816) (70,940)
2.3 : Other liabilitiesa) Other long term liabilities
Other Liabilities - Non Current - 254
- 254b) Other current liabilities
Accrued expenses - 309Salary and Bonus payable - 3,670Other current liabilities - 134
- 4,113
2.4 : Long term loans and advances(Unsecured)Considered goodSecurity Deposits - 119
- 1192.5: Trade Receivables(Unsecured)Receivables from holding company and other group companies - 24,788
- 24,788Less: Provision for doubtful debts - -
- 24,788
Reddy US Therapeutics Inc 741
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 31 March 2013 31 March 2012
2.6 : Cash and bank balancesCash on hand - -Bank balances In current accounts 1,836 2,172
1,836 2,172
Particulars For the year ended For the year ended31 March 2013 31 March 2012
2.7 : Other incomeInterest income - 100
- 100
2.8 : Other expenseLegal and professional 601 218Rates and taxes - 19Repairs and maintenance Plant and machinery - 191 Others 73 -Miscellaneous 21,563 3,131
22,237 3,559
Reddy US Therapeutics Inc 742
2.9: Commitments and contingent liabilities
There are no commitments and contingent liabilities as on 31 March 2013 (previous year Nil).
2.10: Related Party Disclosures:
The Company has following amounts due from/to related parties:
As at As atParticulars 31 March 2013 31 March 2012
i. Due from related parties(Included in Trade Receivables)Dr. Reddy’s Laboratories Limited - 24,788
2.11: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.12 : The Company, incorporated in the United States of America, is a 100% Subsidiary of ReddyAntilles N.V.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao Satish Reddy G V PrasadPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 10 May 2013
Notes to Financial Statements
Note 2 : Notes to financial statements (continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
Trigenesis Therapeutics Inc 743
Dear Members,
Your Directors present this report of the Company for the period from 1 April 2012 to 4 December 2012.The Company was dissolved on 4 December 2012.
Financial Highlights
The following table gives the financial highlights of the Company for the period from 1 April 2012 to 4December 2012 as compared to previous financial year ended 31 March 2012.
(` in Thousands)Particulars 01 April 2012 - 01 April 2011 -
04 December 2012 31 March 2012
Profit/ (Loss) for the period after taxation (17,480) (1,127)Balance brought forward (240,631) (239,504)Deficiency transferred to Share Capital 258,111 -Balance carried forward to Balance Sheet - (240,631)
Directors Responsibility Statement
In terms of Section 217(2AA) of the Companies Act, 1956, your Directors confirm as under:
1. In preparation of Annual Accounts, the applicable accounting standards have been followedalong with proper explanation relating to material departures;
2. We have selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of the state ofaffairs of the Company for the period ended 4 December 2012 and of loss of the Company for theperiod from 1 April 2012 to 4 December 2012;
3. We have taken proper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of this Act for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with theCompanies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 relating toconservation of energy, technology absorption, foreign exchange earnings and outgo are not applicableto your Company.
Acknowledgement
Your Directors wish to express their gratitude to all concerned for the co-operation to the Companyduring the period.
for and on behalf of the Board of Directors
Place: Hyderabad G V Prasad Satish ReddyDate: 04 December 2012 Director Director
DIRECTORS’ REPORT
Trigenesis Therapeutics Inc 744
AUDITORS’ REPORT
ToThe Board of DirectorsDr. Reddy’s Laboratories Limited,Hyderabad.
We have audited the accompanying financial statements of Trigenesis Therapeutics Inc., a companyincorporated and administered outside India, which comprise the Balance Sheet as at 04 December2012, and the Statement of Profit and Loss for the period from 1 April 2012 to 4 December 2012, and asummary of significant accounting policies and other explanatory information.
Management is responsible for the preparation of these financial statements, prepared to comply withthe requirements of section 212 of the Companies Act, 1956, that give a true and fair view of thefinancial position, financial performance of the company in accordance with the Accounting Standardsreferred to in sub-section (3C) of section 211 of the Companies Act, 1956, to the extent applicable andrelevant to a company incorporated outside India.
Our responsibility is to express an opinion on these financial statements based on our audit carried outfor the limited purpose of complying with sec.212. We conducted our audit in accordance with theStandards on Auditing issued by the Institute of Chartered Accountants of India, to the extent applicableand relevant. Those Standards require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether the financial statements are free from materialmisstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the Company’spreparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonablenessof the accounting estimates made by management, as well as evaluating the overall presentation of thefinancial statements. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion.
In our opinion and to the best of our information and according to the explanations given to us, thefinancial statements give the information required by the Act to the extent applicable and relevant, inthe manner so required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 04 December 2012;and
(b) in the case of the Statement of Profit and Loss, of the loss for the period from 1 April 2012 to 4December 2012; and
As required by section 227(3) of the Act, we report that:
a. we have obtained all the information and explanations which to the best of our knowledge andbelief were necessary for the purpose of our audit;
Trigenesis Therapeutics Inc 745
b. in our opinion proper books of account as required by law have been kept by the Company so faras appears from our examination of those books to the extent applicable and relevant to acompany incorporated outside India;
c. the Balance Sheet, Statement of Profit and Loss, dealt with by this Report are in agreement withthe books of account; and
d. in our opinion, the Balance Sheet, Statement of Profit and Loss, comply with the AccountingStandards referred to in subsection (3C) of section 211 of the Companies Act, 1956, to the extentapplicable and relevant to a company incorporated outside India.
For A. Ramachandra Rao & Co.Chartered AccountantsICAI FRN : 002857S
A. Ramachandra Rao Partner
Place : Hyderabad Membership No: 9750Date : 04 December 2012
Trigenesis Therapeutics Inc 746
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars Note4 December 2012 31 March 2012
EQUITY AND LIABILITIESShareholders’ fundsShare capital 2.1 - 9Reserves and surplus 2.2 - 17,471
- 17,480
Non current liabilitiesLong term borrowings 2.3 - 216
- 216
TOTAL - 17,696ASSETSNon current assetsFixed assets Intangible assets 2.4 - 17,689
- 17,689Current assetsCash and bank balances 2.5 - 7
- 7
TOTAL - 17,696
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao G V Prasad Satish ReddyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 04 December 2012
Balance Sheet
Trigenesis Therapeutics Inc 747
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
For the period For the periodParticulars Note 1 April 2012 - 1 April 2011 -
4 December 2012 31 March 2012
IncomeOther operating revenues 232 -
Revenue from operations 232 -Other income 2.6 3,435 -
Total revenue 3,667 -
ExpensesDepreciation and amortization expense 2.4 610 1,079Other expenses 2.7 7 48
Total expenses 617 1,127
Profit before exceptional andextraordinary items and tax 3,050 (1,127)Exceptional items - Impairment of intangibles 2.4 20,530 -
Profit / (Loss) before tax (17,480) (1,127)Tax expense - -
Profit / (Loss) for the period (17,480) (1,127)
Significant accounting policies 1Notes to financial statements 2
The accompanying notes are an integral part of financial statements.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao G V Prasad Satish ReddyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 04 December 2012
Statement of Profit and Loss
Trigenesis Therapeutics Inc 748
Note 1: Significant accounting policies(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
a) Basis of preparation of financial statements
The financial statements have been prepared and presented in accordance with the accountingprinciples generally accepted in India (“GAAP”) and comply with the mandatory AccountingStandards (“AS”) notified by the Central Government of India under section 211(3C) of CompaniesAct, 1956, other pronouncements of Institute of Chartered Accountants of India and provisions ofCompanies Act, 1956.
The financial statements have been prepared based on books, records and other returns maintainedby the subsidiary. The financial statements have been presented in Indian Rupees, for thelimited purpose of complying with section 212 of the Companies Act, 1956.
The Company was dissolved on 4 December 2012.
b) Foreign currency transactions, balances and translation of financial statements
Foreign currency transactions are recorded using the exchange rates prevailing on the dates ofthe respective transactions. Exchange differences arising on foreign currency transactions settledduring the year are recognised in the profit and loss account.
c) Intangible assets and amortisation
Intangible assets are recorded at the consideration paid for acquisition including any importduties and other taxes (other than those subsequently recoverable by the enterprise from thetaxing authorities), and any directly attributable expenditure on making the asset ready for itsintended use.
Intangible assets are amortised on a systematic basis over the best estimate of their usefullives, commencing from the date the asset is available to the Company for its use.
d) Impairment of assets
The Company assesses at each balance sheet date whether there is any indication that an assetmay be impaired. If any such indication exists, the Company estimates the recoverable amountof the asset.
For the purpose of impairment testing, assets are grouped together into the smallest group ofassets (Cash Generating Unit or CGU) that generates cash inflows from continuing use that arelargely independent of the cash inflows of other assets or CGUs.
The recoverable amount of an asset or CGU is the greater of its value in use and its net sellingprice.
If such recoverable amount of the asset or the recoverable amount of the cash generating unit towhich the asset belongs is less than its carrying amount, the carrying amount is reduced to itsrecoverable amount. The reduction is treated as an impairment loss and is recognised in thestatement of profit and loss. If at the balance sheet date there is an indication that if a previouslyassessed impairment loss no longer exists, the recoverable amount is reassessed and the assetis reflected at the recoverable amount subject to a maximum of amortised historical cost.
Notes to Financial Statements
Trigenesis Therapeutics Inc 749
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 4 December 2012 31 March 2012
2.1 : Share capitalAuthorisedNil (previous year 1000) shares of USD 1.01 each - 45
IssuedNil (previous year 206) shares of USD 1.01 each - 9
Subscribed and paid-up206 shares of $1.01 each 9 9Add : Balance in securities premium transferred to
share capital on dissolution 258,102 -Less : Balance in surplus account
transferred to share capital on dissolution 258,111 -
Nil (previous year 206) shares of USD 1.01 each - 9
(a) Reconciliation of the equity shares outstanding is set out below:
As at 4 December 2012 As at 31 March 2012Particulars No. of Amount No. of Amount
Equity shares Equity shares
Number of shares outstandingat the beginning of the year 206 9 206 9Less: On account of dissolution of the entity (206) (9) - -
Number of shares outstandingas at 4 December 2012 - - 206 9
(b) Terms/rights attached to equity shares
The company has only one class of equity shares having a par value of USD 1.01 per share.Each holder of equity shares is entitled to one vote per share.
(c) Details of shareholders holding more than 5% shares in the company
As at 4 December 2012 As at 31 March 2012Particulars No. of Equity % equity No. of Equity % equity
shares held shares held shares held shares held
Dr. Reddy's Laboratories Limited - - 206 100
Notes to Financial Statements
Note 2 : Notes to financial statements
Trigenesis Therapeutics Inc 750
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 04 December 2012 31 March 2012
2.2 : Reserves and surplusSecurities premium reserveBalance at the beginning of the year 258,102 258,102Additions / (deductions) during the year - -Surplus transferred to share capital on dissolution of entity (258,102) -
- 258,102
DeficitBalance at the beginning of the year (240,631) (239,504)Add: Current year loss (17,480) (1,127)Less: Transferred to capital on account of dissolution 258,111 -Balance carried forward - (240,631)
- 17,471
2.3 : Long term borrowingsUnsecuredBorrowings from holding company and other group companies - 216
- 216
Trigenesis T
herapeutics Inc751
Notes to F
inancial Statem
ents
2.4 : Fixed assets (All amounts in Indian Rupees thousands, except share data and where otherwise stated)
Gross Block Amartisation / Impairment Net Block
Description As at Additions Deletions Forex As at As at For the Impairment Deletions Forex As at As at As at
01-04-2012 04-12-2012 01-04-2012 year 04-12-2012 04-12-2012 31-3-2012
Intangibles 228,319 3,451 231,770 - - 210,630 610 20,530 231,770 - - - 17,689
TOTAL 228,319 3,451 231,770 - - 210,630 610 20,530 231,770 - - - 17,689
Previous year 228,319 - - - 228,319 209,538 1,079 - 13 210,630 17,689
Note 2 : Notes to financial statements (Continued)
Trigenesis Therapeutics Inc 752
Notes to Financial Statements
Note 2 : Notes to financial statements (Continued)
(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)
As at As atParticulars 04 December 2012 31 March 2012
2.5 : Cash and bank balancesCash on hand - -Bank balances In current accounts - 7
- 7
For the year period For the periodParticulars 01 April 2012 - 01 April 2011 -
04 December 2012 31 March 2012
2.6 : Other incomeForeign exchange gain, net 3,435 -
3,435 -
2.7 : Other expenseForeign exchange loss, net - 37Advance written off 1 -Bank charges 6 11
7 48
Trigenesis Therapeutics Inc 753
2.8 : Related Party Transactions:
The Company has following amounts due from/to related parties:
As at As atParticulars 04 December 2012 31 March 2012
Due from related parties(included in Long term borrowings): Dr. Reddy’s Laboratories Limited - 216
2.9: Impairment of Intangibles
Following the Company’s decision to discontinue its research and development on terbinafinenail lacquer, the Company carried out an impairment test of its intangibles and recorded animpairment loss of the same amounting to ̀ 20,530, during the period ended 4 December 2012.
2.10: Comparative figures
Previous year’s figures have been regrouped/ reclassified wherever necessary, to conform tocurrent year’s classification.
2.11: The Company was dissolved on 4 December 2012.
As per our report of even date attached
for A. Ramachandra Rao & Co. for and on behalf of the Board of DirectorsChartered AccountantsICAI FRN No. 002857S
A. Ramachandra Rao G V Prasad Satish ReddyPartner Director DirectorMembership No. 9750
Place : HyderabadDate : 04 December 2012
Notes to Financial Statements
Note 2 : Notes to Financial Statements (Continued)(All amounts in Indian Rupees Thousands, except share data and where otherwise stated)